Financial report summary: 1. Revenue +4% year on year, net profit +10.5% year on year, and steady performance growth. Revenue for the first three quarters was +4.0% yoy (+4.6% vs 1H23), of which net interest income was +1.4% yoy; net non-interest income was +11.5% yoy. Profit increased 10.5% year over year (vs. 1H23 +11% year over year). 2. The quarterly net interest income was -2% month-on-month, the quarterly annualized net interest spread fell 9 bps to 1.89%, the quarterly annualized asset yield fell 5 bps to 4.41% month-on-month, and the interest rate on interest-bearing debt increased 4 bps to 2.41% month-on-month. 3. Assets and liabilities: Loan growth is accelerating, and deposit growth is slowing. (1) Asset side: Interest-bearing assets increased 16.1% year on year; total loans increased by 12.7% year on year; bond investment remained high by 31.3%; and interbank assets declined for four consecutive quarters. 3Q23 added 44.5 billion dollars in loans in a single quarter, an increase of 12.3 billion yuan over last year's 3Q22 quarter; additional loans of 172.6 billion dollars were added in the first three quarters, an increase of 13.6 billion yuan over the same period last year, and credit investment was relatively good. (2) Debt side: Total debt increased 17.2% year on year; total deposits increased 4.1% year on year, debt issuance increased 29.2% year on year, and interbank debt increased 78% year on year. 4. The growth rate of net non-interest income increased 11.5% year on year, a marginal increase of 3 points from the 1H23 growth rate (+8.5% over 1H23), net fee revenue increased 9.2% year on year (+12.2% year on year), the marginal growth rate weakened slightly, and net other non-interest income increased by 12.5% year on year (+6.9% year on year with VS1H23), and the growth rate increased marginally. 5. Asset quality: Asset quality remains stable, and safety margins are further improved. Negative dimensions - the non-performing rate remained at 1.45% month-on-month, annualized net bad generation was 1.06%, down 13 bps month-on-month, and the absolute value level was low. The provision dimension - the provision coverage rate increased 52 bp to 182.94% over the previous month; the loan ratio was 2.65%, up 1 bps from month to month. 6. The allotment of shares was completed, and the core Tier 1 capital adequacy ratio increased month-on-month. The company completed allotment of A and H shares in June-July, raising $9.756 billion and HK$3,047 billion respectively. The 3Q23 core tier 1 capital adequacy ratio, level 1 capital adequacy ratio, and capital adequacy ratio were 8.28%, 9.62%, and 11.83% respectively, with month-on-month changes of +10, +5, and +0 bp.

Investment suggestions: Company 2023E, 2024E, 2025E PB 0.44X/0.40X/0.37X; PE4.70X/4.21X/3.87X. The operating area of Zheshang Bank is of high quality. As the strategy for deep cultivation in Zhejiang continues to deepen, the share of weak and sensitive assets in the economic cycle continues to rise, asset quality burdens are being cleared at an accelerated pace, and allotment of shares helps improve capital. Continued growth in subsequent performance can be expected. It was covered for the first time, and a “increase in holdings” rating was given.

Risk warning: The economic downturn has exceeded expectations, and the company's operations have fallen short of expectations.