Loan growth accelerates, profit growth is under pressure
From January to June, the net profit, operating income and PPOP were-2.3%,-3.1% and-5.2% compared with the same period last year, which were higher than those in January-March-3.4pct,-6.2pct and-7.7pct, respectively. Expansion drives performance growth, while narrowing spreads and mid-income fluctuations are the main drag. In view of the pressure on the middle income, we forecast EPS1.69/1.76/1.83 yuan in 23-25 years, and BVPS forecast value in 23 years is 15.53 yuan, corresponding to PB0.37 times. Comparable company's 23-year Wind unanimously predicted that the average PB is 0.72 times, and the company has more room for growth in the province, but in view of the upward risks in some industries and the potential risks are still being cleared, we give the 23-year target PB0.43 times, the target price of 6.68 yuan, and maintain the "overweight" rating.
Credit is strong, interest rate spread is stable
At the end of June, total assets, loans and deposits were + 6.4%, + 16.2% and + 3.9%, respectively, compared with the end of March-0.1pct, + 2.8pct,-4.4pct. With the accelerated expansion of credit, the growth of public loans is eye-catching. At the end of June, the balance of public loans was + 20.5% of the same period last year. Q2 new loans were all contributed to the public. The net interest margin in January-June was 2.18%, which was the same as that in January-March. The rate of return on loans and interest-bearing assets from January to June is higher than that of 22 years-9bp and-16bp respectively.
The cost pressure drop on the debt side has been effective. The deposit yield and interest-bearing debt cost ratio in January-June are higher than those in 22-4bp and-8bp, respectively, mainly due to the decline in corporate time deposit interest rates. The demand deposit rate at the end of June is 34.1% higher than that at the end of March + 0.6pct, and the structure of the debt side has also improved.
The middle income is under pressure, and other non-interest returns.
Non-interest income from January to June was-6.4% compared with the same period last year, which was faster than that of + 20.5pct in January-March, and investment income picked up somewhat.
From January to June, it closed-36.4% compared with the same period last year, which was faster than that of January-March-4.7pct. Mainly due to the company's continuous adjustment of business structure, pressure reduction of non-standard scale, investment bank fee income year-on-year-35.9%; affected by market fluctuations, the scale of wealth management business decreased, financial product fee income-37.7% year-on-year. At the end of June, the company's non-capital preservation balance was 63.6 billion yuan, up from-5.6% at the end of 22. Investment income from January to June (investment income + fair value change income + exchange earnings) + 10.4% compared with January-March + 32.8pct, mainly due to the increase in government subsidies, other income + 114.8% compared with the same period last year.
The credit cost goes down and the capital adequacy ratio increases.
From January to June, annualized ROA and ROE were year-on-year-0.09pct and-1.26pct to 0.88% and 10.82%, respectively. At the end of June, the defect rate and provision coverage rate were 1.47% and 274% respectively, compared with-2bp and + 14pct at the end of March.
The attention rate at the end of June was 3.30% higher than that of the upstream 6bp at the end of March. It is estimated that the annualized bad generation rate of 23Q2 is 0.82%, which is higher than that of 23Q1 ring ratio-0.13pct. 23Q2 annualized credit cost is 2.10%, year-on-year-0.72pct, driving profit release. At the end of June, the capital adequacy ratio and core tier one capital adequacy ratio were 14.21% and 11.06% respectively, compared with + 1bp and + 3bp at the end of March.
Risk hint: the economic repair is not as strong as expected, and the deterioration of asset quality is higher than expected.