Introduction to this report:
The Bank of Beijing's performance report for the third quarter of 2023 is generally in line with expectations. Q3 The growth rate of single-quarter revenue and net profit declined month-on-month, but credit continued to maintain rapid growth and interest spreads increased marginally.
Key points of investment:
Investment advice: Considering the narrowing of interest spreads and the increasing pressure on the wealth management business, adjust the 2023-2025 net profit growth forecast to 6.05% (-8.19pc)/9.51% (-1.13pc)/10.77% (+1.35pc). The corresponding EPS is 1.09 (-0.09) /1.20 (-0.12) /1.35 (-0.11) yuan. The target price was raised to 5.50 yuan, corresponding to 0.47 times PB in 2023, maintaining an increase in holdings rating.
Q3 The growth rate of revenue and net profit declined month-on-month, and credit continued to grow rapidly. Q3 The revenue growth rate declined 10.7pc month-on-month, mainly due to the sharp decline in the growth rate of net income from handling fees and commissions.
However, thanks to strong credit growth in Q3 and the recovery in net interest spreads from month to month, the net interest income growth rate, which is the most important part of revenue, rose 0.7 pc month on month. Q3 There was a clear decline in profit growth before provision, mainly due to the sharp increase in business and management expenses. It is speculated that marketing efforts have been increased. The Q3 net profit growth rate rebounded to 3.6% by reducing the level of provisions and increases.
A marginal increase in net interest spreads. Q3 The net interest spread for a single quarter increased by 7 bps month-on-month. According to estimates, the yield on interest-bearing assets increased slightly in the first three quarters, hedging the negative factors of the increase in the cost ratio of interest-bearing debt and boosting interest rate spread performance. Presumably, the main contribution comes from the optimization of the internal structure of loans. The share of consumer loans in Q3 in total loans increased by about 0.8 pc over month.
Asset quality remains stable. The bad rate dropped by 1 bps month-on-month, and the provision coverage rate decreased slightly by 2.4pc month-on-month, and the bad generation situation was relatively stable.
Risk warning: Demand recovery falls short of expectations.