The growth rate of performance leads the industry. Revenue and net profit in the first three quarters of 2023 were + 4.1% and + 10.5% respectively compared with the same period last year, respectively. The performance of Q3 in the single quarter was + 3.0% and + 9.8% respectively, which was better than that of the joint-stock banks. Split: ① interest net income + 1.4 per cent year-on-year (Q3 quarter-on-year-1.8 per cent), is expected to be mainly dragged down by the spread, loans to maintain rapid growth, growth to 12.8 per cent. The net income of ② handling fees is + 9.2% year-on-year (Q3 single quarter + 2.1%), with a downward growth rate; other non-interest income of ③ is + 13.1% year on year (Q3 single quarter + 25.6%), mainly driven by Q3 investment income + 65% year-on-year.
The ④ credit impairment loss was-5.6% compared with the same period last year, and the credit cost fell to 1.65%.
The expansion of the table has been positive, and the growth rate of loans has further increased. The total assets of 2023Q3 are + 16.3% year-on-year, of which loans and financial investment are + 12.8% and + 30.6% respectively. In the first three quarters of 2023, new loans totaled 172.6 billion yuan, an increase of 13.6 billion yuan over the same period last year. Loans maintained rapid growth, rights issues landed, and the core tier one capital adequacy ratio rose to 8.28%. In terms of the pace of delivery, Q1/Q2/Q3 loans contributed 40%, 34% and 26% respectively in a single quarter. In terms of liabilities, the total debt of 2023Q3 is + 16.4% compared with the same period last year, of which deposits are + 4.2% year-on-year. The company continues to optimize the deposit structure, and the proportion of demand deposits increases.
The net interest margin is expected to be weighed down by the asset side and there is still room for improvement on the debt side. The net interest margin for the first three quarters of 2023 (the caliber at the beginning of the period) is measured on a month-on-month basis-2bp, year-on-year-25bp. It is expected that mainly affected by the downward interest rates on the asset side, the cost on the debt side of the company continues to improve this year, reducing high-interest deposits, increasing the proportion of low-cost deposits, and there is still room for tapping potential on the debt side.
The defect rate is flat, and the asset quality is stable and improving. The 2023Q3 defect rate was unchanged at 1.45% month-on-month, the provision coverage rate slightly increased to 183%, and the loan-to-loan ratio increased to 2.65%. It is expected that the company's stock burden will be gradually cleared, and the impairment pressure will be released slowly.
In terms of capital, by the end of the third quarter of 2023, the core level I, level I and total capital adequacy ratios were 8.28%, 9.62% and 11.83%, respectively. The landing of the company's AxiH rights issue will help to enhance capital strength and support credit to maintain the expansion potential.
Earnings forecast and rating: we slightly adjust the company's EPS to 0.55 yuan and 0.61 yuan in 2023 and 2024, respectively, and expect net assets per share to be 5.86 yuan by the end of 2023. Based on the closing price on October 28, 2023, the PB at the end of 2023 is 0.43 times. Maintain the "overweight" rating.
Risk hint: asset quality fluctuates more than expected, and the implementation of the strategy is not as expected.