The revenue and profit of Guizhou Bank maintained the trend of expansion in the first half of 2023, the deposit and loan both achieved good growth, and the investment business performed brightly compared with the same period last year. At the same time, the marginal improvement of asset quality, defective rate and attention rate have decreased.
Matters: the Bank of Guizhou released its mid-2023 report that the operating income / return net profit in the first half of the year was 6.43 billion yuan / 2.21 billion yuan respectively, an increase of 6.9% and 1.0% respectively over the same period last year.
The operation is steady and the performance is expanding. Operating income in the first half of 2023 grew 6.9% from a year earlier, significantly higher than the growth rate in 2022 (+ 2.2% year-on-year). 1) interest income is basically flat, and non-interest income is growing rapidly: in the first half of 2023, the company's net interest income was-0.4% compared with the same period last year, and non-interest income increased significantly by 45.4% compared with the same period last year, of which service fee income decreased by 19.9% year-on-year. Other non-interest income increased by 68.6% compared with the same period last year, which is the driving factor for the rapid growth of revenue. 2) the level of expenditure decreased slightly, and the provision continued to be high: 2023H1 business and management fees were + 3.2% compared with the same period last year, and the cost-to-income ratio decreased to 26.4% from 27.3% in the first half of 2022. The loss of asset impairment was + 15.7% compared with the same period last year, of which the provision for loan impairment decreased by 12.9% compared with the same period last year, and actively increased the provision for impairment of financial investment.
Interest business: deposit and loan growth is good. 1) smooth credit delivery: in mid-2023, corporate loans / interest-bearing assets increased by 9.7% and 7.6% respectively compared with the beginning of the year, and actively increased the allocation of securities investment (+ 6.3% compared with the beginning of the year).
Loans are available to both public and retail investors. Corporate loans and retail loans are 12.9% higher than at the beginning of the year by 8.8%.
2) the growth of debt-side deposits is good, and actively control costs: in mid-2023, corporate deposit / interest-bearing liabilities increased by 9.6% and 7.8% respectively compared with the beginning of the year. In terms of deposit structure, the company's demand deposits / retail deposits increased by 10.9% and 15.5% respectively compared with the beginning of the year, of which the incremental contribution of retail deposits was as high as 55%. 3) the decline in asset pricing has led to a narrowing of the interest margin: the rate of return on assets has fallen sharply. In the first half of 2023, the rate of return on corporate loans / interest-bearing assets fell 21/19bps respectively compared with the whole of 2022, and the cost ratio of interest-bearing liabilities decreased by 7 bps compared with the whole of last year. The supporting effect is relatively limited, and the net interest margin has dropped by 15bps to 2.07% compared with the whole of last year.
Non-interest business: the middle income is under pressure, and the performance of investment income is outstanding. 1) Agency and guarantee business has declined:
In mid-2023, the company's agency business and guarantee consulting business decreased by 14.1% and 19.3% respectively compared with the same period last year, which was the main factor in the decline in fee income. On the other hand, the bank card business maintained a growth trend (year-on-year + 35.4%), with a moderate and downward impact. 2) Investment income has increased significantly: in the first half of this year, the increase in securities investment increased significantly and the interest rate environment improved. In mid-2023, the net income from corporate trading + net income from investment securities was + 50.1% compared with the same period last year, which made a significant contribution to non-interest income and overall revenue.
Asset quality: the margin has improved. 1) the ratio of non-performing and concerned loans has declined, and the proportion of overdue loans is basically stable:
In the first half of 2023, the company's defective rate / concern rate fell by 10/8bps to 1.38% and 2.61% respectively from the beginning of the year, and the overdue loan ratio was basically unchanged at 1.86% compared with the beginning of the year. In terms of sub-structure, the bad rate of public loans decreased by 14bps compared with that at the beginning of the year, while the bad rate of retail loans increased 20bps, mainly due to the increase of 20bps to 1.83%. 2) increased risk offset: by the end of the first half of 2023, the provision coverage rate increased by 16.6pcts to 367.8% compared with the beginning of the year.
Risk factors: macroeconomic growth declined faster than expected; asset quality deteriorated significantly; net interest margin fell faster than expected; regional economic development was lower than expected; regional inter-industry competition intensified.
Conclusion: the asset quality is improved and the investment income is eye-catching. The revenue and profit of Guizhou Bank maintained the trend of expansion in the first half of 2023, the deposit and loan both achieved good growth, and the investment business performed brightly compared with the same period last year. At the same time, the marginal improvement of asset quality, defective rate and attention rate have decreased. We predict that the company's annual return net profit in 2023-24-25 is 38.6 pound 40.9 billion yuan, corresponding to EPS 0.26 yuan / 0.28 yuan / 0.31 yuan, and the current H share price corresponds to 2023 0.55xPB.