Recently, Changsha Bank disclosed the third-quarter report of 2023: 3Q23 realized operating income of 18.751 billion yuan, YoY+8.44%; returned to its mother net profit of 5.845 billion yuan, YoY+ 9.21%, and the annualized weighted average ROE was 13.73%.
By the end of September 2023, the asset size was 1.017603 trillion yuan, the non-performing loan ratio was 1.16%, and the provision coverage rate was 311.26%.
1. The growth rate of performance has dropped slightly, and ROE is stable.
Revenue growth is declining and profit growth is stable. 3Q23 realized revenue of 18.751 billion yuan, an increase of 8.44% over the same period last year, and the growth rate was 3.68% lower than that of 1H23. Of this total, 3Q23's net interest income grew by 14.59 per cent. The net profit of 3Q23 was 5.845 billion yuan, an increase of 9.21% over the same period last year, and the growth rate was 1.4% lower than that of 1H23.
ROE is basically stable. The annualized weighted average ROE of 3Q23 was 13.73%, down 0.16% from the same period last year.
2. the scale of credit has maintained a rapid growth, and the interest rate spread has decreased slightly.
The scale of credit has maintained a relatively rapid growth, and the structure of negative assets is good. By the end of September 23, the total assets, loans and deposits increased by 12.48%, 14.56% and 9.34% respectively compared with the beginning of the year, and the loan scale maintained rapid growth. The proportion of loans in assets increased, and the proportion of loans in total assets increased to 47.96% from 45.62% at the end of 22.
The spread fell slightly. It is estimated that the net interest margin of 3Q23 is 2.33%, which is 1BP lower than that of 1H23 and 8BP lower than that of 22 years, and the interest rate spread is slightly lower, mainly affected by the decline of LPR and market interest rate fluctuations.
3. The quality of assets is stable, and the coverage rate of provisions is slightly reduced.
The quality of assets is stable, and the provision is slightly reduced. As of the end of September 2023, the non-performing loan ratio was 1.16%, the same as at the end of 1H23 and the end of 22, while the concerned loan ratio was 1.63%, up 15BP from the end of 22. By the end of September 2023, the provision coverage rate was 311.26%, 1.75 percentage points lower than 1H23, and the loan ratio was 3.61%, which was 1BP lower than 1H23.
The capital adequacy ratio is stable. By the end of September 2023, the core tier one capital adequacy ratio, the tier one capital adequacy ratio and the capital adequacy ratio were 9.33%, 10.30% and 12.76%, respectively, which increased by 0.17% and 0.14%, respectively, compared with 1H23.
Investment advice: the strategy of Changsha Bank is clear and in line with the future development direction of the industry, with a high level of management and strong execution, which is expected to stand out in the future development and help the valuation rise. We value the target at 0.7 times 23-year PB, corresponding to 10.50 yuan per share, maintaining a "highly recommended" rating.
Risk tips: financial concessions, bank spreads narrowed; stable growth policies are not as good as expected and economic repair is not as expected.