Steady expansion of scale and narrowing of interest rate spread
The net profit, revenue and PPOP of Societe Generale from January to September are-9.5%,-5.6% and-7.7% respectively compared with the same period last year, which is faster than that of January-June-4.6pct,-1.4pct and-1.2pct. From January to September, the company's annualized ROE and ROA increased from-2.60pct and-0.18pct to 12.13% and 0.91%, respectively. Narrowing spreads, falling non-interest rates and rising credit costs are a drag on performance. We predict that the EPS in 23-25 will be 4.02 BVPS 4.14 BVPS 4.32 yuan, and that in 23 years will be 34.47 yuan, corresponding to PB0.45 times. Comparable company 23 years Wind consensus forecast PB average 0.46 times, the company "green bank, wealth bank, investment bank" development strategy is clear, and further deepen the strategic connotation, should enjoy a certain valuation premium, we give 23-year target PB0.58 times, target price 19.99 yuan, maintain the "buy" rating.
The growth of deposits and loans has accelerated, and the resilience of interest spreads has been highlighted.
At the end of September, the growth rates of total assets, loans and deposits were + 9.2%, + 9.9% and + 11.6%, respectively, compared with-0.9pct, + 0.6pct and + 0.9pct at the end of June. 23Q3's new loans came from public-to-public business, and the size of retail and bills at the end of September was lower than that at the end of June. The fixed deposit trend is still significant, with demand deposits accounting for 34.9% at the end of September, which is higher than that at the end of June-2.1pct. The net interest income of Q1-Q3 is + 1.09% year-on-year, which is higher than that of 23H1+1.9pct, mainly due to the steady growth of interest-bearing assets and the easing of pressure on narrowing interest spreads. The net interest margin (public value) of January-September is 1.94%, which is higher than that of January-June-1bp. We estimate that the cost of Q3 debt is slightly lower than the previous month, or because the proportion of interbank debt is relatively high, the cost of debt can benefit from the reduction in MLF more quickly.
Middle income growth is under pressure, other non-interest fluctuations
The intermediate business income from January to September is-30.4% compared with the same period last year, which is faster than that of 0.1pct from January to June. The middle income is still under pressure, mainly due to the decline in the scale of old wealth management products and fluctuations in the capital market.
From January to September, other non-interest income was-2.6% compared with the same period last year, mainly due to the correction in the valuation of transactional financial assets under market interest rate fluctuations, and the fair value change profit and loss subject changed to floating losses. In addition, tax-free income such as interest income from Q1-Q3 treasury bonds increased, or increased the allocation of interest-rate debt with low capital occupancy. The cost-to-income ratio from January to September is 27.9%, compared with the same period last year + 1.6pct, or due to increased investment in strategic key areas such as digital construction, business transformation, brand and customer infrastructure.
Hidden risk indicators fluctuate and credit costs rise
At the end of September, the non-performing loan ratio and provision coverage rate were 1.07% and 238% respectively, which were higher than those of-1bp and-8pct at the end of June. The company further confirmed the asset quality, taking the initiative to reduce some non-overdue risk projects to the concern category, which accounted for 1.53% of the upside 0.18pct at the end of September. It is estimated that the annualized bad generation rate of 23Q3 is 1.05%, which is higher than that of Q2+0.11pct. It is estimated that the credit cost of Q3 is 0.20%, compared with the same period of last year + 0.23pct. The asset quality of the company's real estate and government financing platform business tends to be stable, and the credit card asset quality is under pressure, but the forward-looking indicators have improved. At the end of September, the company's capital adequacy ratio and core tier one capital adequacy ratio were 13.78% and 9.47% respectively, with a month-on-month ratio of + 0.13pct and + 0.18pct.
Risk hint: the economic repair is not as strong as expected, and the deterioration of asset quality is higher than expected.