Annual report overview: 1. Full-year revenue -4% YoY, net profit +0.8% YoY. Net interest income was -5.3% YoY (-4.72% YoY in 3Q23), and the decline widened marginally, mainly due to widening interest spreads. Net non-interest income increased 2.0% year over year (-1.93% year over year in 3Q23), mainly driven by other non-interest income, and processing fees were still a drag factor. 2. Single-quarter annualized interest spreads declined by 12 bps month-on-month, mainly dragged down by the asset side. Return on assets declined 16 bps month-on-month, and debt-side costs fell 4 bps month-on-month. 3. Assets and liabilities: Deposits and loans maintained a high year-on-year increase; the structure remained stable month-on-month. Loans:
The year-on-year growth rate was +12.4%, which is basically the same as the 2022 growth rate (12.3%); deposits: 12.1% year-on-year, which is slightly lower than the 2022 year-on-year growth rate (12.8%). 4Q23 single-quarter deposits fell 488.8 billion month-on-month, in line with seasonal rules. 4. Refinement of deposits and loans: The investment of public support was more obvious throughout the year; both public and private deposits achieved good growth. The share of new credit to the public sector was 81% throughout the year, up 16.4% from last year's increase. Mortgages continue to drag down, and credit cards have improved compared to 2022. Both public and private deposits achieved good growth. The growth rate of residents' deposits was higher than that of corporate deposits, with year-on-year increases of 13.9% and 10.5%, respectively. 5. Net non-interest year-on-year growth rate marginally positive (+2%): driven by net other non-interest income. Net handling fee revenue was -7.7% year over year, up from the year-on-year decline in the 1st to 3rd quarter. Agency services achieved a positive increase of 3.0% throughout the year. Net other non-interest income increased 59.1% year over year. 6. Asset quality: The defect rate and the bad generation rate decreased year-on-year; the margin of safety is still high. The non-performing rate remained flat at 1.37% month-on-month; the share of concerned loans declined slightly by 10 bps to 1.85% year over year. Overall, it is still low, and there is little bad pressure on the company in the future. The net bad generation rate decreased by 5 bp to 0.45% month-on-month. The overdue rate was 1.27%, a slight increase of 9 bps over the half-year period. The provision coverage rate fell slightly by 2.25 percentage points month-on-month to 213.97%, and loans fell 0.04 percentage points month-on-month to 2.90%. The overall margin of safety is still high. 7. Others: 4Q23 annualized cost and revenue ratio for a single quarter was 38.54%, down 0.48% from the same period last year, and management fees decreased 0.11% year on year.
Investment suggestions: The company 2024E, 2025E PB 0.52X/0.49X; PE 5.38X/5.38X, ICBC has stable and solid fundamentals, an excellent and consolidated customer base, core advantages in debt costs, stable asset quality, and a comprehensive financial service system. Along with the gradual deepening of the “GBC+” strategy, I am optimistic about its continued competitiveness and high moat.
Note: Based on the published annual report, we have fine-tuned profit forecasts and estimated net profit to mother for 2024-2025 of $357.4 billion and $357.3 billion (previous values were $391.5 billion and $420.9 billion).
Risk warning: The economic downturn exceeded expectations, and the company's operations fell short of expectations.