Incident: On October 27, Qilu Bank released its 2023 three-quarter report: Q1-Q3 achieved operating income of 9.097 billion yuan (YoY+ 8.24%) and net profit of 2,937 billion yuan (YoY+ 16.22%).
Comment:
Total assets have been rising steadily, and the trend of strengthening and expanding public and retail loans has increased. As of the end of September, Qilu Bank's total assets reached 568.491 billion yuan, an increase of 12.35% over the end of the previous year, and total loans of 293.384 billion yuan, an increase of 14.04% over the end of the previous year. Mainly driven by the high growth rate of public loans, Qilu Bank supports “specialized and new” science and innovation business, and responds to policy orientation to improve credit investment efficiency for Shandong's “top ten industries” and green industries. As of the end of September, Qilu Bank's loan scale was 2022.99 billion yuan, up 18.77% year on year.
In terms of retail loans, retail business capacity was enhanced through the issuance of special credit cards and consumer loan project processing. The growth rate of the personal loan business declined marginally, but remained at a high level. As of the end of September, the scale of personal loans was 82,855 billion yuan, an increase of 14.43% over the previous year.
The net interest spread declined by 14BP year on year, and interest income stabilized to support revenue growth. Q3's quarterly revenue was 3,021 billion yuan, up 3.30% year on year, mainly supported by interest income. Q3 quarterly net interest income increased 2.18% year on year. The introduction of policies has guided loan interest rates downward. Qilu Bank is deeply involved in sinking the market, and support for small and medium benefits continues to increase. The net interest spread declined by 14BP to 1.81% year on year. Under the downward trend in interest spreads, the increase in loan volume supports basic stability in interest income. Handling fees and net income for a single quarter fell 5.56% year on year. The decline in revenue slowed significantly, and business improved marginally. The growth rate of debt-side deposits was steady. As of the end of September, Qilu Bank's total deposits were 404.115 billion yuan, up 18.43% year on year.
Bad indicators have declined markedly, and asset quality has been improving steadily. Bank of Qilu strictly controls risky business and continues to clear its stock of non-performing loans. Non-performing indicators continued to improve. As of the end of September, Qilu Bank's non-performing rate and attention rate were 1.26% and 1.45% respectively, down 6BP and 37BP from the same period last year, and down 1BP and 15BP respectively from the end of Q2. The provision coverage rate increased to 313.89%, an increase of 47.62 pct over the previous year. The margin of safety increased steadily, and the ability to offset risks was strong. The core Tier 1 capital adequacy ratio increased by 6BP to 9.73% from the end of the first half of the year. Asset quality is steady and improving, and risks are stable and controllable, laying a good foundation for scale expansion. On July 18, Qilu Bank's closing price for 20 consecutive trading days was lower than the latest audited net assets per share, and introduced measures to stabilize stock prices. Shareholders holding 5% or more of the shares increased. Current remunerated directors (excluding independent directors) and senior managers increased their holdings in the company. The implementation of the stock price stabilization plan is progressing well.
Profit forecast: Qilu Bank actively broadens the declining market and is deeply involved in small and micro sectors. Under the downward trend of interest spreads, credit demand continues to rise to support stable revenue growth, negative indicators continue to improve, and asset quality is steady and improving. We expect Qilu Bank's net profit growth rates from 2023-2025 to be 14.50%, 16.98%, and 18.44%, respectively.
Risk factors: risks brought about by business transformation; stricter regulatory policies; downside risks in economic growth, etc.