Credit is put in steadily, and credit cost goes down.
From January to September, the net profit, operating income and PPOP were + 10.2%,-3.8% and-7.9% respectively compared with the same period last year, which was faster than that of-3.4pct,-5.3pct and-6.4pct in January-June. We believe that the main concerns include: sound credit delivery, accelerated middle income growth, and asset quality fluctuations. In view of the slowdown in scale growth, we predict that the EPS 0.86 BVPS in 2023-25 is 1.08 yuan, and that in 23 is 6.70 yuan, corresponding to PB0.63 times. Comparable company's 23-year Wind unanimously predicted that the average PB is 0.60x (10top 30), the company promotes small and micro transformation, the assets expand steadily, and should enjoy a certain valuation premium. We give the 23-year target PB 0.80x, the target price 5.36RMB, and maintain the "buy" rating.
Credit is stable, and spreads are slightly lower.
At the end of September, the year-on-year growth rates of total assets, loans and deposits were + 9.9%, + 11.5% and + 13.4% respectively, higher than those at the end of June-2.9pct, + 0.1pct and-3.8pct. Credit expanded steadily, but the growth of assets slowed down. Q3 new loans are mainly contributed by public loans and bills, accounting for 42%, 47% and 11% of retail, public and bills respectively at the end of September. The proportion of personal deposits to total deposits at the end of September is higher than that of + 0.2pct to 59.4% at the end of June, and the deposit structure is sound. The net interest margin of January-September is 2.03%, which is higher than that of January-June-2bp. We estimate that asset-side pricing has declined in the first three quarters, while debt-side costs have increased slightly compared with the first half of the year, which is speculated to be due to the continued fixed-term trend of deposits.
The growth of middle income is accelerated and the capital adequacy ratio is increased.
Non-interest income from January to September is-20.9% year-on-year, the growth rate is higher than that of January-June-13.2pct, mainly affected by other non-interest fluctuations. The intermediary business income from January to September was + 255.2% compared with the same period last year, the growth rate was higher than that of January-June + 212.6pct, mainly due to the increase in income from agency financial management and insurance fees. From January to September, other non-interest income was-27.5% year-on-year, a growth rate compared with the first half of the year-15.8pct, mainly affected by investment income year-on-year-36%. At the end of September, the capital adequacy ratio and core tier one capital adequacy ratio were 13.27% and 9.60% respectively, compared with + 0.14pct and + 0.14pct at the end of June.
As of October 30, Zhang Bank convertible bonds still have a balance of 2.497 billion yuan. If all shares can be converted, we estimate that the core tier one capital adequacy ratio can be increased to 11.38%, which is expected to strengthen capital strength.
Asset quality fluctuates and credit cost goes down
The annualized non-performing loan generation rate of Q3 is 1.27%, which is 32bp higher than that of Q2.
The follow-up rate at the end of September is 1.37%, which is higher than that of the downlink 10bp at the end of June, and the potential risk index is optimized. Q3 annualized credit cost is 0.38%, year-on-year-0.90pct. From January to September, annualized ROE and ROA increased from + 0.23pct and-0.01pct to 12.23% and 0.97%, respectively.
Risk hint: the economic repair is not as strong as expected, and the deterioration of asset quality is higher than expected.