Key elements of the report:
Everbright Bank released its performance report for the third quarter of 2023.
Investment highlights:
The revenue growth rate declined slightly month-on-month: Everbright Bank's revenue for the first three quarters of 2023 grew -4.3% year on year, down 1.8 percentage points from the first half of 2023; net profit increased 3% year on year, down 0.3 percentage points from the first half of 2023. Among them, the month-on-month decline in net interest spreads and the decline in net revenue from the handling fee business were the main dragging factors; other non-interest income continued to grow, and the growth rate slowed slightly month-on-month; and provision and planning efforts declined.
The growth rate of total assets continues to rise, and net interest spreads are still under downward pressure: loans in the first three quarters of 2023 increased 5.5% year on year, down 1 percentage point from month to month. In the same period, the year-on-year growth rate of total assets reached 9.1%, an increase of 1.1 percentage points over the previous year, and the scale of bond investment was relatively high. The core Tier 1 capital adequacy ratio was 9.11%, up 7BP from the previous month. On the debt side, deposits grew 2.7% year on year, down 2.6 percentage points from month to month. In terms of pricing, interest-bearing asset-side yields remained stable month-on-month, while debt-side costs rose month-on-month to lower net interest spreads. There is still downward pressure on net interest spreads, taking into account factors such as the reduction in stock mortgages.
Asset quality fluctuated slightly: the non-performing rate at the end of September 2023 was 1.35%, up 5BP over the previous month. The provision coverage rate was 175.7%, down 12.9 percentage points from the previous month. Or it may be related to fluctuations in real estate risk. It is still necessary to track real estate-related risks in the future.
Profit forecasting and investment advice: Everbright Bank actively optimizes the balance and liability structure, accelerates the disposal of stock of non-performing assets, and strengthens wealth management characteristics. In the future, as the business strategy progresses, indicators such as FPA, AUM, and GMV will gradually improve, and comprehensive management strength is also expected to be further strengthened. Taking into account the market environment and the adjustments and progress of the company's business structure, we expect net profit from the mother in 2023/24/25 to be 45.764 billion yuan/46.247 billion yuan/48.406 billion yuan, respectively, with year-on-year growth rates of 2.14%, 1.05%, and 4.67%, respectively. According to the closing price of Everbright Bank's A share on November 2 at 2.98 yuan, the PB valuations corresponding to 2023 and 2024 were 0.39 times and 0.36 times, maintaining an increase in holdings rating.
Risk factors: The banking industry as a whole is greatly influenced by macroeconomic, monetary, and regulatory policies. Changes in the economy and related policies will have an important impact on bank operations. This includes changes in net interest spreads, asset quality expectations, etc.