Key points of investment
SPD Bank's net profit in 2023 was -28% year-on-year, with a growth rate of +2.6 pc month-on-month, and profit growth bottomed out.
Overview of the data
According to preliminary accounting for 2023, SPD Bank's net profit fell 28.3% year on year, and the growth rate was fixed 2.6 pc from 2023Q1-3; revenue fell 8.1% year on year, and the growth rate decreased slightly by 0.5 pc from month to month. The defective rate at the end of 2023 was 1.48%, down 4 bps from the end of 2023Q3, provision coverage was 173.5%, and down 3.5pc from the end of 2023Q3.
Profit growth bottomed out
According to preliminary accounting for 2023, SPD Bank's net profit fell 28.3% year on year, and the growth rate fixed 2.6 pc from 2023Q1-3; revenue fell 8.1% year on year, and the growth rate fell slightly by 0.5 pc from 2023Q1-3, bottoming out the profit growth rate.
The profit growth rate has stabilized. The judgment is mainly due to an improvement in depreciation pressure, which is due to improved asset quality. Looking forward to the future, SPD Bank's growth momentum is expected to be restored as the historical burden of stock is gradually digested and strategies are sorted out and advanced after the arrival of new management, and performance is expected to bottom up and improve.
Strategy sorting and promotion
After the new management took office, SPD Bank's strategic path gradually became clear, and its operating momentum was restored. SPD Bank focused on the “five major tracks” of technology finance, supply chain finance, inclusive finance, cross-border finance, and financial finance, and launched the “100 Day Attack” campaign in 23Q4. In 23Q4, SPD Bank's loans increased by 96.3 billion yuan, accounting for an increase of 82% of the year, and an increase of 113.6 billion yuan over the same period last year. The “100-day campaign” has achieved remarkable results.
Bad things continue to improve
At the end of 2023, SPD Bank initially calculated that the non-performing rate was 1.48%, down 4 bps from the end of the 2023Q3 period, and the non-performing amount fell 0.1% month-on-month, achieving a decline in both non-performing loans for 3 consecutive quarters. At the end of 2023, the preliminary accounting provision coverage rate was 173.5%, a slight decrease of 3.5 pc from the end of 2023Q3, and the provision level remained stable.
Profit forecasting and valuation
SPD Bank's 23-year performance bottomed out and momentum improved. The net profit of SPD Bank is expected to increase by 0.17%/6.45% year-on-year in 2024-2025, corresponding to BPS 21.68/22.62 yuan. The current price corresponds to 0.32/0.31 times PB. The target price is 9.06 yuan/share, corresponding to 0.42 times the 2024 PB, and the current price space is 29%, maintaining the purchase rating.
Risk warning: The macroeconomic economy has stalled, and the bad situation has been greatly exposed.