Key investment points: Jiangyin Bank's revenue and profit growth rate remains resilient, asset quality remains stable, and the non-performing rate remains flat. We maintain our “superior to the market” rating.

Revenue remained steady under pressure from interest rate cuts. Jiangyin Bank's 23Q1-3 revenue increased 0.44% year on year, and the net profit of Huimu increased 15.15% year on year; among them, Q3 revenue for the single quarter decreased by 1.34% year on year, and the net profit of Huimu increased 16.70% year on year. Although Q3 was affected by falling interest spreads (13bps), overall revenue remained stable.

Deposits and loans are growing rapidly, contributing mainly to the increase in loans to public loans. Jiangyin Bank's total loan volume for 2023Q3 was 114.452 billion yuan, an increase of 11.32 billion yuan over the end of 2022, an increase of 10.98%. Total deposits were 137.935 billion yuan, an increase of 11.226 billion yuan over the end of 2022, an increase of 11.226 billion yuan. Deposits and loans are growing rapidly. Among them, public loans mainly contribute to the increase in loans.

Asset quality is stable, and focused loans have improved month-on-month. 2023Q3 Jiangyin Bank's non-performing rate was the same as 23Q2 month-on-month, at 0.98%. Note that the loan ratio decreased by 17bps to 1.07% month-on-month, and the provision coverage rate was 473.17%, a decrease of 27.04pct compared to 500.21% in 23Q2. Despite the decline in provision coverage, it remains high and the overall failure rate is stable.

Investment advice. We forecast EPS for 2023-2025 to be 0.83, 0.92, and 1.02 yuan, and net profit growth rates of 11.26%, 10.55%, and 11.45%. We obtained a reasonable value of 5.47 yuan according to the DDM model (see Table 2); according to the PB-ROE model, the 2023E PB valuation was 0.75 times (0.55 times that of comparable companies), and the corresponding reasonable value was 5.29 yuan. Therefore, the reasonable value range is 5.29-5.47 yuan (6.37-6.59 times PE corresponding to 2023, 5.92 times PE for peer companies), maintaining the “superior to market” rating.

Risk warning: The solvency of enterprises has declined, and asset quality has deteriorated drastically; major changes have occurred in financial supervision policies.