Agricultural Bank released the 2023 annual results report.
Investment highlights:
Net profit to mother increased by 3.91% year on year: in 2023, we achieved revenue of 694.829 billion yuan, an increase of 0.03% year on year, and realized net profit to mother of 269.356 billion yuan, an increase of 3.91% year on year. Among them, a higher increase in scale, a decline in provision increases, and a decline in effective tax rates are positive contributing factors to performance growth.
Assets and liabilities continued to expand steadily: total assets grew 17.5% year over year in 2023, of which loan size increased 14.5% year over year. Investment assets increased 17.7% year over year, mainly due to an increase in large-scale government debt holdings. Total liabilities increased 18.3% year over year, with deposits growing 15.0% year over year.
Net interest spread declined month-on-month: The company's net interest spread in 2023 was 1.60%, down 2 bps month-on-month. On the asset side, on the asset side, the yield on interest-bearing assets in 2023 was 3.41%, down 2 bps from 2023H1, of which the loan yield fell 8 bps. On the debt side, the 2023 interest-bearing debt cost ratio was 1.96%, up 2 bps from 2023H1.
Overall asset quality remained steady: the non-performing rate at the end of 2023 was 1.33%, down 2 bps from the end of 2023Q3, the attention rate was 1.42%, down 2 bps from the end of 2023Q2, and the overdue rate was 1.08%, up from the end of 2023Q2. The bad generation rate remained low in 2023; provision coverage rate was 303.87%, and provision remained relatively high. Among them, there has been an increase in the non-performing rate of retail loans, mainly an increase in the non-performing ratio of farmers' loans; the non-performing rate for public loans has declined.
Profit forecast and investment advice: In 2024, the Agricultural Bank will focus on stabilizing asset quality, stabilizing net interest spreads, and stabilizing the value contribution of intermediary services. Taking into account the market environment and future expansion of the agricultural business, we lowered the profit forecast for 2024/2025 and introduced profit forecast data for 2026. Net profit attributable to mother for 2024-2026 was 273.2 billion yuan, 276 billion yuan, and 285.3 billion yuan, respectively (net profit to mother before adjustment was 283.6 billion yuan and 300 billion yuan before adjustment). Based on the closing price of Agricultural Bank A shares on March 28, PB valuations corresponding to 2024 and 2025 were 0.57 times and 0.53 times, maintaining an increase rating.
Risk factors: The banking industry as a whole is greatly affected by macroeconomic, monetary and regulatory policies. Changes in the economy and related policies will have an important impact on bank operations. This includes changes in net interest spreads, asset quality expectations, etc.