In 2023, Postbank's revenue increased 2.3% year on year, net profit to mother increased 1.2% year on year, and the revenue growth rate rebounded; profit growth declined due to a marginal slowdown in provision release. Specifically, net interest income increased 3.0% year on year, and the growth rate decreased slightly by 0.1 pct from 3Q23, and the performance was stable; non-interest increased -1.09% year over year, and the growth rate stabilized. Excluding the one-off factors affected by the transformation of net worth wealth management products in '22, there is still a 12.1% year-on-year growth rate throughout the year.
Net interest income fell 2.2% month-on-month in 4Q23, and the annualized net interest spread for a single quarter narrowed by 8 bps month-on-month. The cumulative average daily net interest spread in 2023 decreased by 4 bps to 2.01% from 1-3Q23. It is estimated that the annualized interest spread for a single quarter decreased by 8 bp to 1.91% month-on-month, the return on the asset side decreased by 8 bps to 3.45%, and the debt-side interest rate increased by 1 bps to 1.56% month-on-month.
Credit growth is resilient; new deposits are better than in the same period last year. Asset side: 4Q23 credit increased by 128.4 billion dollars in a single quarter, including 56.47 billion yuan in public transactions, 67.13 billion yuan in retail sales, and 4.8 billion yuan in notes, all of which achieved a year-on-year increase. Debt side: Deposits grew steadily, and the share of deposits in interest-bearing debt increased 0.8 percentage points to 95.1% compared to the end of the 3rd quarter. The growth rate of personal deposits continued at a high rate, up 10.8% year on year, and the share of total deposits increased to 89.5%.
The generation of defects is stable, the defect rate and attention rate have increased slightly, and the provision coverage rate has declined. At the end of 4Q23, the company's non-performing rate was 0.83%, up 2 bps from the 3rd quarter; net annualized bad generation in a single quarter was 0.43%, which was the same; the share of concerned loans was 0.68%, up 7 bps from the end of the half year; the provision coverage rate was 347.56%, down 16 percentage points from the previous quarter; and the loan ratio was 2.88%, down 5 bps month-on-month.
Investment advice: The company 2024E, 2026E PB 0.55X/ 0.52X/ 0.48X. The Postbank is the largest retail commercial bank with the largest number of business outlets and the widest coverage in the country. Retail has distinct characteristics, a deep moat on the debt side, and asset quality remains stable. The company has a wide retail customer base. With the construction of a financial damage management system, it is expected to develop unique advantages in leading retail centers. It is a major state-owned bank with differentiated characteristics. It is recommended to focus on it and maintain an “increase in weight” rating.
Risk warning: The macroeconomy is facing downward pressure, and the company's performance and operation fall short of expectations.