The balance sheet restructuring has achieved remarkable results, and the growth rate of net interest income has become positive. Revenue and net profit in the first three quarters of 2023 were-5.6% and-9.5% respectively compared with the same period last year (Q3 single quarter was-8.6% and-17.2%, respectively), and the decline in revenue and profit was further expanded. Split: ① net interest income + 1.1% year-on-year (Q3 single quarter + 5.0%), of which the loan growth rate increased to 10.2%, mainly due to the strong year-on-year growth of public loans + 23%, and the net interest margin was only down 1bp, which outperformed the joint-stock industry. ② fee net income was-30.4% year-on-year (Q3 quarter-year-on-year-30.6%), mainly due to the decline in the size of old wealth management products and fluctuations in the capital market. ③ other non-interest income was-2.6% year-on-year (Q3 quarter-on-year-35.8%), mainly dragged down by fair value changes and exchange gains. In terms of cost, the asset impairment loss is + 2.8% compared with the same period last year, and the impairment will be strengthened to further consolidate the asset quality.
The increment of the public continues to take the lead, and the momentum of the "five new tracks" is good. The total asset size of 2023Q3 is + 9.2% year-on-year, of which loans are + 10.2% year-on-year, with growth rates of 23.0% for public loans and 0.1% for retail loans.
In the first three quarters of 2023, new loans exceeded 330 billion yuan, of which ① loans to public loans increased by more than 450 billion yuan, contributing 136% of the increase, and the growth rate of public loans continued to rise to 23%. Structurally, the "five new tracks" continued to maintain a good momentum. Enterprise funding loans in inclusive finance, science and technology innovation finance, energy finance, auto finance, and park finance increased by 34%, 26%, 11%, 24% and 24% respectively over the end of last year.
② retail loans decreased by about 17 billion yuan, mainly due to the decline in mortgages and credit cards, while operating loans grew better. In terms of liabilities, 2023Q3 deposits were + 11.6% year-on-year, and deposits accounted for 58.8% of interest-paying liabilities.
The spread only decreased by 1bp, which was better than that of the joint-stock bank. The net interest margin in the first three quarters of 2023 was 1.94%, year-on-year-16bp, which was further narrower than that of Q1 (- 29bp) and the first half of the year (- 20bp), with a month-on-month decline of only 1bp, better than that of joint-stock banks. Reason for disassembly: on the asset side of ①, the rate of return on newly invested enterprise funds is higher than that in the fourth quarter of last year. ② deposit side, through lower-cost time deposits to replace higher-cost agreement deposits, structural deposits, cost optimization has achieved remarkable results, the overall deposit cost is the same as the same period last year.
The defective rate will continue to decline, increase the provision of funds, and consolidate the quality of assets. The 2023Q3 defect rate is from-1bp to 1.07%, and the concern rate is from + 18bp to 1.53%. This is mainly due to taking the opportunity of the implementation of the new rules for risk classification to actively reduce some projects that do not exceed but have potential risks to the concern category. The provision coverage ratio is from-8pct to 238% and the loan ratio is from-10bp to 2.55%. The asset quality of real estate and government financing platform business has become stable. Although there is some pressure on the asset quality of credit card business, the forward-looking indicators have improved.
In terms of capital, as of the end of 2023Q3, the core first-tier, first-tier and total capital adequacy ratios are 9.47%, 10.64% and 13.78% respectively. The company's convertible bonds are currently in the conversion period, and the successful conversion will effectively supplement core tier one capital and open up long-term growth space.
Earnings forecast and rating: we slightly adjust the company's EPS forecast to 3.82 yuan and 4.07 yuan in 2023 and 2024, and expect net assets per share to be 33.08 yuan by the end of 2023. Based on the closing price on October 30, 2023, the PB at the end of 2023 is 0.47 times. Maintain the company's "buy" rating.
Risk hint: asset quality fluctuates faster than expected, and the transformation is less than expected.