The company reported a positive performance: the stock risk was significantly cleared, the asset quality-related indicators improved significantly, the profit growth rate increased, the decline in income narrowed, and the performance in the first half increased by 4.9% compared with the same period last year, which was 3% higher than that in the first quarter. Revenue fell 1.6% from the same period last year, narrowing the decline by 5.4 percentage points, narrowing the decline in interest income, and accelerating non-interest income. The company's strategic transformation is firm and the implementation is positive. With the resolution of the historical burden, the retail and digital transformation results improve or strengthen the statements, and the financial performance may be further improved. At present, the company's 23-year PB0.38X,23 annual dividend yield of 7.17%, high dividend, low valuation superimposed fundamental improvement, positive, maintain the company's overweight rating.

Support the main points of rating

The quality of assets has been significantly improved and the stock risk has been cleared significantly.

The defect rate of the Bank of Beijing has declined for four consecutive quarters, with a defect rate of 1.34% in the second quarter and a month-on-month decline in 2bp. It is estimated that the bad rate in the first half of the year was 0.67%, down 21bp from the same period last year. Concern loans accounted for 1.50%, down 11bp from the end of last year, overdue accounted for 1.67%, 59bp was lower than the end of last year, the normal loan migration rate was 1.08%, and 46bp was lower than at the end of last year.

Accelerated scale growth and excellent performance of retail loans

At the end of the second quarter, the total assets of the Bank of Beijing increased by 13.5% compared with the same period last year, an increase of 2.0 percentage points over the first quarter, and loans increased by 11.3% year-on-year, 2.7% higher than the first quarter. Public loans and retail loans increased by 11.2% and 11.4%, respectively. Retail loans have performed well. Bond investment maintained rapid growth, up 19.6% over the same period last year, and trading financial assets increased by 29.4% over the same period last year. Deposits increased by 11.3% year-on-year, 3.0 percentage points higher than in the first quarter.

The spread between deposit and loan interest rates declined slightly in the first half of the year, and bond investment yields fell more.

The net interest margin of the Bank of Beijing in the first half of the year was 1.54%, down 23bp from the same period last year, the net interest margin was 1.54%, the 16bp was down from the same period last year, and the deposit-loan spread was 2.25%, which was lower than that at the end of last year. Compared with the same industry, the drop in deposit-loan interest margin was smaller, and the decline in bond yields was larger. The asset-end yield was 3.67%, down 20bp from the same period last year, the bond investment yield was 3.3% in the first half of the year, down 51bp from the same period last year, and the loan yield was 4.21%, down 14bp from the same period last year. The cost of debt decreased slightly, and the cost of deposit was 1.96%, down 5bp from the same period last year. The company estimates that the quarterly net interest margin in the second quarter is 1.51%, a month-on-month decline of 11bp, and the decline is enlarged.

Financial market business has actively led to a high increase in investment income and narrowed the decline in service fees.

Bank of Beijing's non-interest income rose 5.5% in the first half compared with the same period last year, an increase of 22.3 percentage points over the first quarter. Among them, other non-interest income related to investment increased by 54.8% over the same period last year, an increase of 9.1 percentage points. The net income from handling fees fell 41.4% from the same period last year, which was 11.6 percentage points lower than that in the first quarter.

Valuation

According to the disclosure of the China News, we maintain the company's profit forecast that the EPS will be 1.08 EPS 1.21 yuan from 2023 to 2024, and the current stock price will be 0.38x/0.34x corresponding to 2023 Universe in 2024, maintaining the overweight rating.

Main risks faced by rating

The economic downturn and overseas fluctuations led to the deterioration of asset quality more than expected.