Introduction to this report:
The growth rate of the Postbank's revenue and net profit in 2023 was in line with expectations. The year-on-year interest spread narrowed by 19 bps, which was better than that of its peers, but the bad and attention rate fluctuated slightly, and the target price was lowered to HK$5.0, maintaining an increase in holdings rating.
Summary:
Investment advice: Based on Postbank's 2023 financial report performance and 2024 deposit and loan pricing expectations, the 2024-2026 net profit growth forecast is 0.13%, 2.89%, and 5.8%, corresponding to EPS of 0.82 (-0.11), 0.84 (-0.22), and 0.89 (new) yuan. Taking into account the AH share premium situation and the possibility that the company's future profit growth rate will slow down, the target price was lowered to HK$5.0, corresponding to 0.54 times PB in 2024, maintaining the holdings increase rating.
Revenue and net profit maintained positive growth throughout the year. The 23Q4 revenue growth rate rebounded significantly to 5.6%, mainly due to a 55.4% year-on-year increase in net other non-interest income. Net interest income continued to be compensated by volume, and came to an end in Q4, adding 128.4 billion yuan in credit in a single quarter, an increase of 69.8 billion yuan over the previous year.
Credit growth reached 13% throughout the year, supporting net interest income to maintain positive growth. Affected by stock mortgage interest rate adjustments, the net interest spread for the 23Q4 quarter fell 9 bps month-on-month, and the net interest spread for the whole year narrowed by 19 bps year-on-year. The decline in interest spreads of Postbank was slightly smaller than that of other major banks. Thanks in part to excellent retail genes, the growth rate of retail loans was still significantly higher than that of peers under weak industry demand. The share of retail loans fell by only 1.2 pct compared to the beginning of the year. 23Q4 net profit decreased 6.7% year over year. In addition to base factors, credit impairment accruals increased during the period due to risk fluctuations.
Asset quality fluctuated slightly in 23Q4. The defect rate and attention rate increased by 2 bps, 6 bp to 0.83% and 0.68% respectively at the end of Q3, and the bad generation rate in the second half of the year increased by 11 bps to 0.39% compared to the first half of the year.
Specifically, risks in the real estate industry continue to be exposed. The non-performing rate declined somewhat in the middle of the year, but rebounded to a higher level of 2.45% at the end of June; the retail loan non-performing rate increased by 1 bps from the end of June. Among them, the non-performing ratio for mortgages and microloans increased by 3 bps and 2 bps to 0.55% and 1.73%, respectively. At the end of the year, the company's provision coverage rate was 347.6%, down 16.3pct from the end of Q3. However, as the macroeconomic stabilization trend is consolidated and strengthened, the bank's overall risk is manageable.
Postbank will continue to implement a 30% cash dividend rate in 2023. The corresponding dividend rates for A shares and H shares are 5.54% and 10.53% respectively, which is highly competitive.
Risk warning: Demand recovery fell short of expectations, retail credit risk exposure exceeded expectations.