Key investment points: Postbank's revenue growth rate increased compared to the previous three quarters. The business scale grew steadily, the structure continued to be optimized, the non-performing rate remained below 1%, and maintained a “superior to the market” rating.
The revenue growth rate increased compared to the previous three quarters. The operating income of the Postbank in 2023 was +2.25% year-on-year, and net profit to mother was +1.23% year-on-year. The year-on-year growth rate of operating income increased from 23Q1-3.
The scale of business has grown steadily, and the structure continues to be optimized. The share of medium- to long-term loans increased compared to the end of the previous year. The total loan amount was +13.02% compared to the end of the previous year, and the year-on-year increase reached a record high. Deposits were +9.76% compared to the end of the previous year, and core liabilities maintained steady and healthy development. The deposit-to-loan ratio was 58.39%, up 1.68pct from the end of the previous year, and the asset structure continued to be optimized.
Excluding the one-time impact, net fee revenue achieved double-digit growth. Net revenue from processing fees and commissions decreased by 0.64% year over year. Excluding the impact of one-time factors in the transformation of net wealth management products in the same period in 2022, net income from handling fees and commissions was +12.05%. Mainly, the company actively promoted the transformation and upgrading of wealth management, comprehensively promoted the new “1+N” management and service system, and achieved rapid growth in revenue from wealth management, investment banking, transaction banking, etc.
The defect rate remains below 1%. The annualized non-performing loan generation rate increased by 3 bps to 0.85% compared to 23Q1-3. In 2023, the defect rate was +2 bp to 0.83% month-on-month, the overdue rate decreased by 1 bp to 0.91% month-on-month, the concern ratio increased by 6 bps to 0.68% month-on-month, and the provision coverage rate decreased 16.3 pct to 347.57% month-on-month.
Investment advice. We forecast EPS of 0.83, 0.88, 0.94 yuan in 2024-2026, and net profit growth rates of 1.08%, 6.28%, and 6.63%. We obtained a reasonable value of 5.47 yuan based on the DDM model (see Table 2); according to the PB-ROE model, the 2024E PB valuation was 0.70 times (0.54 times the comparable company), and the corresponding reasonable value was 5.94 yuan. Therefore, the reasonable value range is 5.47-5.94 yuan (corresponding to 2024 PE is 6.63-7.19 times, corresponding PE is 5.38 times for peer companies), maintaining the “superior to market” rating.
Risk warning: The solvency of enterprises has declined, asset quality has deteriorated dramatically; financial supervision policies have undergone major changes.