Steady expansion of assets and improvement of profitability

Net profit, revenue, and PPOP in 2023 were +16.8%, +2.3%, and +1.7% year-on-year, compared with +1.7pct, +1.8pct, and +0.6pct in January-September. In 2023, ROE and ROA were +0.68pct and +0.14pct to 12.55% and 1.14%, respectively. We forecast the company's 24-26 EPS of 0.88/1.00/1.13 yuan, and the 2024 BVPS forecast value of 6.98 yuan, corresponding to 0.53 times PB. Comparatively, the company's 2024 Wind unanimously predicted an average PB of 0.54 times. The company's regional advantage is obvious. The retail transformation strategy continues to advance, and it should enjoy a certain valuation premium. The 2024 target PB is 0.65 times, and the target price is 4.54 yuan, maintaining an increase rating.

Steady expansion of assets and improvement of deposit structures

Total assets, loans, and deposits at the end of 2023 were +10.2%, +11.9%, and +9.7%, respectively. Compared with +2.7 pct, -0.2 pct, and -0.4 pct at the end of September, the deposit and loan market share continued to rank first in the city. Q4 The new loans were mainly notes, accounting for 29% to the public, and retail loans shrank. Net interest spread for 2023 was 2.06%, down 1 bps from January-September and 14 bps down from January-June. The month-on-month decline narrowed. The yield on 23-year interest-bearing assets and loan yields compared to -14 bps and -21 bps from January-June to 3.92% and 4.47%, respectively.

The interest-bearing debt cost ratio and deposit cost ratio remained flat at 2.07% and 2.02% compared to January-June, respectively.

The deposit balance rate at the end of 23 increased by 1.5 pct to 30.3% compared to the end of September, and the deposit structure improved.

High return on investment and increase in capital adequacy ratio

The company adheres to the agricultural support small market position and comprehensively improves the quality and efficiency of small and micro services. At the end of 2023, the bank's reloan balance for agricultural support was 2.62 billion yuan, benefiting 863 agricultural enterprises. Non-interest income in 2023 was +50.6% YoY, +24.0pct compared to January-September. Net revenue from handling fees and commissions was -13.6% year-on-year, compared to January-September - 10.7pct, mainly due to a decline in settlement revenue. Other non-interest income was +62.7% YoY, compared to January-September +31.4pct. Investment income was +104.2% YoY, mainly due to an increase in trading financial asset holding income and bond disposal income. 23 At the end of the year, the capital adequacy ratio and core Tier 1 capital adequacy ratio were 14.24% and 13.10% respectively, +0.28pct and +0.29pct, respectively, compared to the end of September.

Defect rate is stable, provision coverage rate is declining

The non-performing rate and provision coverage rate at the end of 2023 were 0.98% and 409%, the same as at the end of September, and -64pct, respectively.

The performance of the poor indicators was stable. The provision coverage rate declined or fluctuated mainly due to poor generation. The estimated annualized bad generation rate in 2023 was 1.00%, an increase of 0.33 pct compared to 23H1, and an increase of 1.11 pct over 22. The estimated loan credit cost in 2023 was 0.77%, -0.17pct year over year. At the end of 2023, focused loans accounted for 1.06%, compared to January-September-1bp; overdue loans accounted for 1.19%, compared to January-June-26bp. In 2023, a dividend of $0.19 per share is proposed, with an annual cash dividend ratio of 24.8% (2022:24.2%), and a dividend ratio of 5.14% (2024/3/29).

Risk warning: Economic recovery fell short of expectations, and the deterioration in asset quality exceeded expectations.