Introduction to this report:
The 23Q3 revenue of the Zhangjiagang Bank fell 13.2% year on year due to the high base. The profit growth rate was stable, and the asset quality index fluctuated slightly, but overall it remained at a good level. Maintain the target price of 5.95 yuan and maintain an increase in holdings rating.
Key points of investment:
The investment proposal adjusts the 2023-2025 net profit growth rate to 10.1%, 13.5%, and 14.6% according to the business conditions in the first three quarters. The corresponding EPS is 0.85 (-0.03), 0.97 (-0.05), 1.11 (-0.08) yuan/share, and BVPS is 6.94 (-0.26), 7.63 (-0.28), and 8.40 (-0.36) yuan/share. Maintain the target price of 5.95 yuan, corresponding to 0.86 times PB in 2023, and maintain an increase in holdings rating.
Revenue pressure is in line with expectations, and profit growth is steady. 23Q3 revenue fell 13.2% year on year, mainly due to 22Q3 interest spreads and a high base of net other non-interest income, which was a drag. Net interest income in Q3 fell 5.1% year on year. Among them, the growth rate of interest-bearing assets was 5.5 pct to 8.2% compared to Q2, and the net interest spread decreased by 28 bps year over year. However, interest spreads narrowed by only 1 bps month-on-month, and resilience exceeded expectations, mainly due to the moderating effects of asset-side structure optimization. The profit side is to smooth seasonal fluctuations. The Q3 credit impairment calculation decreased 66.7% year over year, supporting a steady 5.1% increase in net profit.
Loan investment has increased, and the size of deposits has declined month-on-month. The year-on-year growth rate of Q3 loans increased by 0.5pct to 12.2%, and new loans of 5.66 billion yuan were added in a single quarter, exceeding the sum of the first half of the year; however, the structure was still mainly based on public and notes, and the scale of retail loans declined slightly. Deposit at the end of the period decreased by 2.23 billion yuan compared to the middle of the year, and the growth rate slowed to 13.4%. The trend is consistent with that of peers.
Asset quality fluctuated slightly, but remained at an excellent level. The bad rate at the end of Q3 increased by 7 bp to 0.95% from Q2, and the provision coverage rate decreased by 66 pct to 445%, with slight fluctuations. However, it may have been affected by poor write-off and impairment charges, and the attention rate fell by 10 bps to 1.37%, which is stable overall.
Risk warning: Demand repair falls short of expectations.