Event Overview On August 27, the company released the 2020 semi-annual report: net profit for the first half of the year increased 1.12% year on year (Q1 increased 10.10% year on year); PPOP fell 0.10% year on year (Q1 increased 7.17% year on year); revenue fell 0.79% year on year (Q1 increased 3.55% year on year); cumulative annualized weighted ROE 11.16% (Q1 annualized weighted ROE 12.84%), down 1.08pct year on year. Scale expansion accelerated, and performance maintained positive growth thanks to accelerated scale expansion and declining taxes. In the first half of the year, the company's net profit to its parent maintained positive year-on-year growth, and the growth rate was far higher than the net profit growth rate of commercial banks -9.41% and urban commercial banks -2.59% during the same period. The performance growth rate fell 8.98 pct from the first quarter, mainly due to increased provision and planning and an increase in the year-on-year decline in net interest spreads, while taxation contributed positively. The loan structure was optimized to ease the decline in interest spreads and the company's net interest spread in the first half of the year was 2.09%, down 17 bps from the full year of last year. Among them, the yield on interest-bearing assets and the cost ratio of interest-bearing debt decreased by 11 bps and increased by 8 bps, respectively, from the full year of last year. On the asset side, the average loan yield fell by 10 bps compared to the full year of last year. The average balance of personal loans with a high yield as a share of total loans increased by 5.23 pct compared to the full year of last year, relieving the downward pressure on loan yields to a certain extent. On the debt side, the average cost ratio of deposits increased by 35 bps compared to the full year of last year. Although a 4.62 pct increase in the ratio of personal deposits with a high cost ratio to total savings has boosted deposit interest rates, it has also left room for future structural optimization and pressure reduction on high-interest structured deposits, thereby easing the downward pressure on interest spreads. Asset quality is stable, and capital advantages are outstanding. The company's non-performing ratio remained flat at 1.17% month-on-month at the end of the second quarter, continuing to maintain its lowest level in nearly five years and the low position of listed banks. The attention rate fell by 6 bps to 2.63% month-on-month, and the pressure to generate hidden non-performing loans lessened. At the end of the second quarter, the company's non-performing loan deviation increased slightly by 90 bps to 97.27% compared to the end of the previous year, which is at a reasonable level. The provision coverage rate fell 3.33 pct to 268.03% month-on-month, and the ability to withstand risks is still strong. The company is well capitalized at all levels. At the end of the second quarter, the core Tier 1 capital adequacy ratio fell 47 bps to 12.37% month-on-month, ranking first among listed banks. In June of this year, it was approved to issue no more than 4 billion yuan of secondary capital bonds. Currently, there is still 2 billion yuan to be issued, and the capital will be further replenished in the future. The investment suggests that the company maintain positive performance growth through quantitative compensation, stable asset quality, reduced pressure to generate hidden non-performing loans, and sufficient capital. In the future, sufficient capital is expected to continue to support accelerated scale expansion, and performance growth can be expected. We forecast net profit growth rates of 3.14%, 7.05%, and 10.09% in 2020-2022, respectively. The 2020 BVPS was 5.75 yuan, corresponding to 0.95 times the static PB. Maintain a “Recommended” rating. Risks indicate fluctuations in asset quality, central decline in interest rates, and economic recovery falling short of expectations.