In 2023, Agricultural Bank's revenue fell 0.1% year on year, net profit to mother increased 3.9% year on year, and the revenue decline subsided; profit growth rate was generally stable. Specifically, net interest income increased -3.1% year on year, up 0.1 pct from 3Q23; non-interest rate increased 18.8% year over year, and the growth rate picked up somewhat.
4Q23 net interest income was -3.6% month-on-month. The annualized net interest spread for a single quarter decreased by 9 bps month-on-month, asset-side earnings declined, and debt costs rose slightly. The average cumulative daily net interest spread in 2023 decreased by 2 bps to 1.60% compared to 3Q23. It is estimated that the annualized interest spread for a single quarter fell 9 bps to 1.42% month-on-month, the asset-side return decreased by 5 bps to 3.22% month-on-month, and the debt-side interest rate rose 6 bps to 1.98% month-on-month.
Credit growth has slowed; the growth rate of bond investment has increased, and the allocation of special treasury bonds is expected to increase in the fourth quarter. The size of deposits remained stable. 4Q23 credit increased by $284.1 billion in a single quarter, including 58.3 billion dollars in public transactions, a decrease of 24.1 billion dollars in retail sales, and an increase of 379.9 billion dollars in notes. In the fourth quarter, deposits grew 0.1% month-on-month. Single-quarter deposits increased by 41,843 billion yuan, a year-on-year decrease of 154.3 billion yuan; the share of deposits in interest-bearing debt decreased by 2.5 percentage points to 79% compared to the end of the third quarter.
The quality of assets continues to improve, and the overall provision situation is stable. At the end of 4Q23, the company's defect rate was 1.33%, down 2 bps from month to month. The net annualized negative generation in a single quarter was 0.09%, down 24 bps from the 3rd quarter. Concerned loans accounted for 1.42%, down 2 bps from mid-year. The provision coverage rate was 303.87%, down 0.25 percentage points from the previous month; the loan ratio was 4.05%, down 4 bps from the previous month.
Investment advice: Company 2024E, 2025E, 2026E PB 0.58X/ 0.54X/ 0.51X. Agricultural Bank fundamentals are generally stable, valuations are cheap, dividend ratio is high, profitability is excellent, stock risk is constantly being cleared, and asset quality is steady and improving. It is recommended that active attention be paid. Maintain an “Overweight” rating.
Risk warning: The macroeconomy is facing downward pressure, and the company's performance and operation fall short of expectations.