Quarterly report highlights: 1, net profit growth remained stable year-on-year. The growth rate of revenue and PPOP slowed to a certain extent compared with the same period last year, but the rate of decline was significantly weaker than that in the second quarter, in which the net fee income supported the company's revenue in the third quarter, with the year-on-year growth rate from negative to positive. Under the overall stable asset quality, the provision of provisions slowed down slightly in the third quarter, while tax incentives increased, leading to a decrease in the year-on-year growth rate of net profit and remained stable as a whole. Retail loans and total deposits remained high in the second and third quarters. The internal structure of asset-end credit was transformed and adjusted, and retail loans increased by 1.77 billion in a single quarter, accounting for 86% of the total increase in the single quarter, an increase of 6.7% over the previous quarter. The company began to transform its fast loan business in the past 20 years and began to expand in the third quarter under the economic recovery, which effectively supported the scale of credit. Deposits on the debt side increased for five consecutive quarters from the previous quarter, and the size increased by 1.7 percentage points to 4.2% compared with the second quarter, mainly driven by corporate time deposits, up 13.3% from the previous quarter.

3. The growth rate of net fee income has improved significantly over the same period last year, from negative to positive growth of 21.7%. 4. On the whole, the asset quality remains at an excellent level. The defect rate is stable and the annualized bad net generation in a single quarter is higher than the previous quarter with the increase in write-off. In the future, the bad pressure tends to ease, and the concern loans both decline. The margin of safety is stable at a high level. 5. The capital is endogenous, and the core first-tier capital adequacy ratio increases month-on-month. The core tier one capital adequacy ratio, tier one capital adequacy ratio and capital adequacy ratio of 3Q20 are 11.14%, 11.14% and 17.91% respectively, with a month-on-month ratio of + 33, + 33 and + 342bp. The company's capital is replenished internally, and 4.5 billion convertible bonds are issued during the reporting period, which will effectively supplement the company's core first-tier capital after the subsequent equity conversion.

Quarterly report is insufficient: 1. Net interest income was affected by interest spreads in the third quarter, with a month-on-month growth of-3.9%. Under the drag of the debt side, the single-quarter annualized interest rate spread fell to 1.75% month-on-month, mainly due to the debt side drag, and the asset-end yield also declined slightly. Looking back, the company's business transformation continues to advance, the asset end of the high-yield fast loan business, in the case of the gradual transmission of market interest rates to credit rates, asset-side structural adjustment will jointly lead to a more significant improvement in the rate of return. The interest payment cost of debt-side companies has always been at a better level in the industry, and the optimization of the debt structure will also lead to the improvement of the interest payment rate of interest-bearing liabilities.

Investment suggestion: company 2020E, 2021E PB 0.99X 9.90X/9.34X 0.93X 9.90X/9.34X (Agricultural Commercial Bank PB0.86X/0.79X;PE 9.01X/8.80X), the company has promoted the transformation of "big retail" business in recent years, the asset side has launched small fast loan business, and the liability side has continued to promote gridding marketing to stabilize deposits, driving both sides of the capital and negative sides to achieve continuous structural optimization and adjustment. At the same time, benefiting from the strength of the regional economy, the transformation of the business model contributes to a steady improvement in performance. At the same time, the company is strict in the identification of bad, the overdue rate is on the low level of agricultural commercial banks, and the overall asset quality is stable and good, so it is suggested to keep active attention.

Risk hint: the economic downturn is faster than expected and the company's business is not as good as expected.