China CITIC Bank disclosed its 2023 annual report, which is basically consistent with the previous performance report data. The company achieved operating income of 205.9 billion yuan in 2023, a year-on-year decrease of 2.6%, the same growth rate as in the previous three quarters; realized net profit of 67 billion yuan, an increase of 7.9% year-on-year, and a decrease of 1.3 percentage points from the previous three quarters. The company's weighted average return on net assets in 2023 was 10.8%, the same as the previous year. The company has previously disclosed a quick performance report, and the main data is basically consistent.
Asset size is growing at a steady rate. The company's total assets at the end of 2023 were 9.05 trillion yuan, up 5.9% from the end of the previous year, and the asset growth rate remained at a relatively stable level. Among them, total loans increased 6.7% year on year to 5.50 trillion yuan in 2023, and deposits increased 6.0% year on year to 5.47 trillion yuan. The company's current asset growth rate is not high. The dividend rate has stabilized at 26%. The endogenous pressure on capital has been reduced relatively. At the end of the year, the core Tier 1 capital adequacy ratio rebounded slightly by 0.25 percentage points to 8.99% at the beginning of the year.
Net interest spreads continued to decline, dragging down revenue growth. The average daily net interest spread disclosed by the company in 2023 was 1.78%, a year-on-year decrease of 19 bps. At the same time, it was affected by declining loan interest rates and rising deposit interest rates. The yield on interest-bearing assets fell 16 bps to 3.95% year on year in 2023. Among them, loan yield fell 25 bps to 4.56% year on year, mainly affected by factors such as falling LPR, insufficient credit demand, and stock mortgage interest rate adjustments. Interest rates for all types of loans declined slightly; debt costs rose slightly by 1 bps to 2.20% year on year in 2023, with combined deposit costs rising 6 bps to 2.12% year on year, but parent bank deposit costs benefited from lower listed interest rates, which declined year-on-year. The net interest spread for the fourth quarter of 2023 was 1.66%, and continued to drop by 10bps from the third quarter.
Asset quality remains stable, and provisions are made to feed back profits. By the end of 2023, the company's non-performing loan ratio was 1.18%, down 0.09 percentage points from the beginning of the year; the year-end attention rate was 1.58%, down 0.06 percentage points from the beginning of the year; the estimated annual bad generation rate was 1.14%, which was basically the same as the previous year; and the provision coverage rate at the end of 2023 was 208%, up 6 percentage points from the end of the previous year. Overall, the quality of the company's assets remained stable, and provisions continued to feed back profit growth. In 2023, “provision accrual/bad generation” was 84%, down 16 percentage points from the previous year.
Investment advice: The company's overall fundamental performance is relatively stable. We slightly adjust the company's profit forecast by one year based on factors such as the recent LPR reduction and push it forward by one year. We expect the company's 2024-2025 net profit of 700/72 billion yuan (previous forecast value 707/74.5 billion yuan), net profit to mother of 75 billion yuan in 2026, a year-on-year growth rate of 4.4%/3.0%/4.0%; diluted EPS is 1.43/1.53 yuan; the PE corresponding to the current stock price is 4.4/4.3/4.1x, and PB is 0.47/0.44/0.41x, maintaining the “gain” rating.
Risk warning: The weakening macroeconomic situation may adversely affect the quality of bank assets.