Everbright Bank's profit for the first three quarters of 2023 increased 3.0% year on year, operating income fell 4.3% year on year, and profit and revenue growth fell slightly compared to the first half of the year. The main pressure came from interest spreads, handling fees, and contributions from provisions and scale. The company's assets, liabilities, and business structure are consistent with those of the stock bank industry. The debt side accounts for a higher share of public deposits, the cost is rigid, the share of asset-side retail loans is relatively high, loan growth and marginal asset quality trends are weak, and performance and business pressure are in sync with that of the stock bank industry.
In a weak external environment, the company adheres to the Wealth Bank strategy, adheres to service entities and national strategies, and the main development line of digital management, and actively consolidates its business foundation. Integrated public financing (FPA) increased 3.6% from the beginning of the year, retail asset management (AUM) increased 9.3% from the beginning of the year, and interbank financial transaction volume (GMV) increased 25.1% year over year, and the strategy is being actively promoted. The base for the fourth quarter declined, the pressure on revenue and performance may ease, and phased performance may still be constrained by the external environment. Continued improvement in fundamentals can be expected as the company's strategy continues to advance. Maintain an increase in holdings rating.
Key points to support ratings
Profit and revenue growth rates declined slightly compared to the first half of the year
In the first three quarters, Everbright Bank's net profit was up 3.0% year on year. The growth rate was slightly down 0.3 percentage points from the first half of the year, revenue fell 4.3% year on year, and the growth rate was 1.8 percentage points slower than the first half of the year. Among them, interest income fell 4.3% year on year, non-interest income fell 4.4% year on year, and the growth rate all slowed down. ROAE was 10.23%, down 0.67 percentage points from the previous year.
Everbright Bank completed its early debt-for-equity conversion, and its capital strength increased significantly year over year. The core capital adequacy ratio for the third quarter was 9.11%, up 42 bps year on year.
The year-on-year decline in interest income increased, and the month-on-month decline in interest spreads in the 3rd quarter narrowed slightly. Everbright Bank's interest rate income for the first 3 quarters fell 4.3% year on year. The decline increased from the first half of the year. It is estimated that the net interest spread for the first 3 quarters was 1.78%, down 22 bps year on year, and the year-on-year decline increased from the first half of the year. It is estimated that the quarterly net interest spread for the 3rd quarter was 1.74%, down 4 bps from the previous quarter. The decline was slightly narrower than the previous quarter. The yield on interest-bearing assets was estimated at 4.10%, up 2 bps from month to month, and the estimated cost ratio of interest-bearing debt was 2.38%, up 4 bps from month to month. The growth rate of deposit and loan growth slowed, accounting for a relatively medium term decline, and structural factors suppressed the net interest spread.
The growth rate of deposits and loans is slowing down, and the growth of bond investment is accelerating
At the end of the third quarter, the company's total assets increased 9.1% year on year, and the growth rate was 1.1 percentage points higher than the end of the second quarter. Loans and deposits increased 5.5% and 2.7% year on year respectively, growth rates decreased by 1.1 and 2.6 percentage points from the end of the second quarter, bond investment increased 12.7%, and traded assets increased 27.2% year on year, all increasing in growth rate.
Other non-interest contributions, negative increase in handling fees
Everbright Bank's non-interest revenue for the first three quarters fell 4.4% year on year, processing fee revenue fell 11.4% year on year, and other non-interest income increased 9.9% year over year. The year-on-year growth rate all slowed.
Asset quality is basically stable, and provisions have declined slightly
Everbright Bank's non-performing rate for the 3rd quarter was 1.35%, up 5 bps from the 2nd quarter, and the amount of non-performing loans increased 4.1% month-on-month, which may still be mainly due to pressure on the retail side.
Everbright Bank's asset impairment losses in the first three quarters fell 12.8% year on year, feeding back profits. The provision coverage rate for the third quarter was 175.65%, down 12.91 percentage points from the second quarter, the loan ratio was 2.37%, down 0.09 percentage points from the previous quarter, and there was a decline in stock reserves for backfeeding.
valuations
According to the company's quarterly report, we adjusted the company's profit forecast. EPS from 2023 to 2025 is 0.70/0.71/0.75 yuan. The current stock price corresponding to 2023/2024 PB is 0.39x/0.35x, maintaining an increase in holdings rating.
The main risks faced by ratings
Economic downturn and overseas risks exceed expectations.