Event: on October 24, Ping an Bank released the third quarter report of 2023, the company's 9M23 achieved revenue of 127.6 billion yuan, yoy-7.69%; returned to its parent net profit of 39.6 billion yuan, yoy+8.12%; annualized weighted average ROE of 13.15% yoy+8.12%; 0.37pct; non-performing loan ratio of 1.04%, month-on-month + 1bp, compared to the beginning of the year-1bp.
Revenue fell slightly and net profit continued to grow in the first three quarters. The revenue of Ping an Bank 9M23 is 127.6 billion yuan, the net profit of yoy-7.69%, is 39.6 billion yuan, and the net interest income of yoy+8.12%, is 91.4 billion yuan, yoy-6.16%. The single-quarter revenue of 3Q23 is 39 billion yuan, and the net profit of yoy-15.6%, is 14.2 billion yuan. Yoy-2.22%, is mainly dragged down by the decline of net interest income and other non-interest income. The net interest income of 3Q23 is 28.7 billion yuan, and at the end of yoy-13.7%;3Q23, the net interest margin is 2.47%. Compared with the end of 1H23-8bp, the company mainly continues to make profits in the real economy, appropriately increases the credit of low-risk businesses and high-quality customers, and is affected by multiple factors such as loan repricing effect and changes in market interest rates.
The scale of housing-related loans continued to decline, and the increase in deposit scale was driven by individual time deposits. As of 3Q23, the overall credit growth rate of Ping an Bank has slowed down this year, with total loans of 3.43 trillion, + 2.91% compared with the beginning of the year, mainly driven by corporate loans; as of 3Q23, corporate loans are 1.38 trillion, + 7.49% compared with the beginning of the year. Among them, the balance of public real estate loans in the housing-related business that bears credit risk decreased by 8.68 billion yuan to 267.2 billion compared with the end of 1H23. In terms of deposits, as of 3Q23, the total deposit is 3.45 trillion, which is 2.17% higher than that at the end of 1H23, mainly due to the increase in the scale of individual time deposits, and 1.18 trillion for personal deposits, which is 2.53% higher than that at the end of 1H23. The fixed term of deposits continues, and the cost side increases, which continues to put pressure on the net interest margin.
The decline in investment income compared with the same period last year is a drag on non-interest income, which is expected to be mainly due to fluctuations in the bond market. The non-interest income of 3Q23 in the single quarter was 10.3 billion yuan, of which yoy-20.5%, the net income of fees and commissions maintained growth, 3Q23 income was 23 billion yuan, and the profit and loss of yoy+2.47%; investment income and fair value changes was 3.53 billion yuan,-23.5% compared with the same period last year, which was the main drag. It is expected that the investment income will decline mainly due to the fluctuation of the bond market in the third quarter.
The wealth management business is growing steadily. As of 3Q23, the company's retail customer AUM was 4 trillion yuan, + 11.5% at the end of last year, and fortune customers increased to 1.37 million, + 8.2% at the end of last year. 3Q23 company realized wealth management fee income of 1.46 billion yuan, of which yoy+3.18%;, 3Q23 agent personal insurance income of 648 million yuan, yoy+68.8% (2Qyoymilk 162%). At the end of 3Q23, the number of employees of the company's new bancassurance team increased to more than 2500. With Ping an Group's "comprehensive finance + health care" ecological advantage, agent insurance income is expected to continue to grow, but due to the impact of fee reduction through bancassurance channels, the growth rate is expected to slow down in the follow-up.
The quality of assets remains stable and the ability to offset risks is good. As of 3Q23, the company's non-performing loan ratio has risen to 1.04% 7.66pct, which is higher than that at the end of last year-1bp. The company will actively respond to changes in the macroeconomic environment and promote risk prevention and resolution, and the company's asset quality is expected to remain stable. The company's provision coverage rate is 282.6%, which is higher than that at the end of last year, but the risk offset ability continues to be good.
Investment advice: maintain a "highly recommended" rating. The company adheres to the principle of "leading by science and technology, making retail breakthroughs and doing better to the public" to build an intelligent retail bank; the company's asset scale has grown steadily, its asset structure has gradually improved, its net profit has maintained growth, and its wealth business has developed steadily under market fluctuations. It is expected that the company's retail business will improve as the economy recovers. We forecast that the operating income of 23E/24E/25E is 174.3 billion / 182.8 billion / 192.2 billion yuan, respectively, which is-3%, 5%, 5%, 5%, 5%, 5%, 5%, 5%, 5%, 5%, 5%, 5%, 5%, 5%, 5%, 5%, 5%, 5%, 5%, 5%, 5%, 5%, 5%, 5%, 5%, 5%, 5%, 5%, 5%, 5%, 5%, 5% and 5%, respectively. On October 25, 2023, the closing price was 10.38 yuan per share, and the PB corresponding to 23E/24E/25E was 0.50Unix 0.45max.
Risk hint: macroeconomic recovery is not as expected, industry policy has shifted sharply, and corporate strategy has not been promoted as expected.