Key points of investment:
Investment advice: Taking into account the 2023 financial report and the 2024 credit volume and price trend forecast, the Postbank adjusted the 2024-2026 net profit growth forecast to 0.13%/2.89%/5.80%, corresponding to EPS0.82 (-0.11) /0.84 (-0.22) /0.89 (new) yuan. The target price was lowered to 6.10 yuan, corresponding to 0.77 times PB in 2024, maintaining the holdings increase rating.
Credit growth continued at a high rate. Postbank's revenue and net profit growth rates in 2023 were 2.3% and 1.2%, respectively, up 1.0pc from 2023Q1-Q3. The overall performance was stable, and the high increase in other non-interest revenue in Q4 boosted revenue. Credit growth was strong. Credit growth in Q4 reached 128.4 billion yuan in a single quarter, an increase of 69.8 billion yuan; the growth rate of loans in 2023 was 13.0%, of which the growth rate for public loans was strong, with a year-on-year growth rate of 20.4% in 2023.
The comparative advantage of net interest spreads continues, and deposit cost control effects are remarkable. The net interest spread for the full year of 2023 was 2.01%, narrowing by 19 bps year on year, making it more resilient than the industry. The strong net interest spread performance was mainly due to the debt-side contribution. The cost ratio payable to bonds declined markedly. Under the trend of deposit regularization, the deposit cost ratio of Postbank in 2023 fell 8 bps year on year, and the personal deposit cost ratio fell 9 bps year on year.
Asset quality fluctuated slightly, and overall remained at an excellent level. Compared to Q3, the non-performing rate increased by 2 bps, mainly due to the increase in the non-performing rate of the real estate industry and personal microfinance loans. The attention rate increased by 6 bps, the overdue rate decreased by 1 bp, the disclosed bad generation rate increased by 3 bps, and the forward-looking indicators fluctuated slightly.
The provision coverage rate decreased by 16.3pc compared to Q3, and reasonable provision was reduced to release profits.
Risk Warning: Demand recovery fell short of expectations; retail loan risk exposure exceeded expectations.