Express report summary: 1. SPD Bank's revenue for the full year of 2023 fell 8.1% year on year, down 0.5 points from the previous three quarters; asset quality improved and profits were effectively fed back, and net profit to mother fell 28.3% year on year, and the decline was 2.5 percentage points narrower than in the third quarter. 1Q23/1H23/3Q23/2023 revenue decreased by 3.8%/7.5%/7.6%/8.1%, respectively; operating profit decreased by 14.2%/23.1%/30.1%/27.6%, respectively; net profit to mother decreased by 18.3%/23.3%/30.8%/28.3%, respectively. 2. The asset size of SPD Bank exceeded 9 trillion dollars for the first time. Among them, loans were invested close to 100 trillion dollars in a single quarter, the highest increase since mid-2021, with a year-on-year increase of 2.4%; deposits increased 3.3% year-on-year throughout the year, and the growth rate slowed to a certain extent due to the high base for the same period last year. 1) Since the fourth quarter of 2023, the company has been guided by a digital intelligence strategy, focusing on the “five major tracks” of technology finance, supply chain finance, inclusive finance, cross-border finance, and financial finance, and carrying out a “100-day campaign” to increase asset investment. The amount of credit added in the fourth quarter was 96.26 billion, a significant increase of 113.6 billion over the same period in 2022. Loan balances increased 2.4% year over year in 2023, and the share of loans in total assets decreased slightly by 0.2% to 55.7% month-on-month. 2) Deposits increased by 28.94 billion dollars in the fourth quarter, a year-on-year decrease of 53.16 billion dollars under the high base for the same period last year. Deposit stocks increased 3.3% year over year in 2023, and the share of deposits in total debt decreased by 1.1% to 60.2% month-on-month.
3. Defects have both declined, provisions are more stable, and asset quality has improved. 1) Bad dimensions - SPD Bank insists on “controlling the new and reducing the old”, and continues to step up efforts to dispose of its stock of non-performing assets. The balance of non-performing loans and the non-performing loan ratio have achieved a “double reduction” for four consecutive years. As of the end of the reporting period, the Group's balance of the last three types of non-performing loans was 74.198 billion yuan, a decrease of 421 million yuan from the end of the previous year; the non-performing loan ratio was 1.48%, down 0.04 percentage points from the end of the previous year; 2) The provision dimension - risk offsetting capacity declined slightly from month to month, but increased from '22. The provision coverage rate for the fourth quarter fell slightly by 3.5 percentage points month-on-month to 173.51%, up 14.47 percentage points from the end of the previous year; loans fell 11 bps to 2.57% month-on-month, up 15 bps from the end of the previous year.
Investment advice: Company 2023E, 2024E, 2025E PB 0.34X/0.32X/0.31X; PE6.00X/6.14X/6.13X. In recent years, SPD Bank has stepped up its inventory risk management efforts and adjusted its structure at a steady pace. The company has an advantage in public business and continues to work hard on the retail side. In the future, it will focus on observing its asset quality trends and business development direction. For the first time, we gave an “gain” rating.
Risk warning: The economic downturn exceeded expectations, and the company's operations fell short of expectations.