Annual Report Overview: 1. Steady growth in revenue and profit: revenue (minus other business costs compared to the annual report) +3.8% YoY, and net profit +2.4% YoY. Revenue declined slightly from the 3Q23 year-on-year increase (+4.9%), and net profit was wider than the 3Q23 year-on-year increase (+1.6%). Net interest income +1.6% YoY (vs 3Q23 +3.7% YoY), net non-interest income +13.3% YoY (vs 3Q23 +11.6% YoY). 2. The month-on-quarter annualized net interest spread was -11bp, dragged down by both the asset and debt side: net interest spread fell 11 bps to 1.47% month-on-month, the return on annualized assets fell 7 bps to 3.52% month-on-month, and the debt interest rate rose 5 bps to 2.23% month-on-month. 3. Growth rate and structure of assets and liabilities: Steady expansion, and the year-on-year growth rate of deposits and loans surpassed last year. Loans for the full year increased 13.7% year over year (2022 increased 11.7% year over year; Full-year deposits increased 13.4% year over year (up 11.3% year over year in 2022). 4. Detailed breakdown of deposits and loans:
More than 90% of new shares were added to the public sector throughout the year; both public and private deposits achieved high growth. (1) In terms of credit investment, new credit to the public sector accounted for more than 90% of the total increase during the year. New investment in public loans was mainly in leasing commercial services and manufacturing, and the share of new real estate was less than 5% (4.5%). In terms of inventory, the share of the large infrastructure category increased by 3.3 points to 35.9% compared to the beginning of the year, while the share of the real estate category decreased by 0.4 points to 7.4% compared to the beginning of the year. (2) Deposit situation analysis: The trend of deposit periodization continues. 1. In terms of term, time deposits increased 24.5% year-on-year this year, accounting for an increase of 4.76 percentage points to 53.5% compared to the beginning of the year. Both corporate and residents' deposits maintained high double-digit growth. 5. Net non-interest income: Net processing fees increased 5.3% year-on-year, making it the only bank among the six major banks to achieve a net increase in net processing fees; other non-interest charges remained high. 6. Asset quality: The generation of defects remains stable, and the identification of defects is strict. The defect rate remains at 1.27%. The cumulative annualized net generation rate was at a low level of 0.54% month-on-month; provision coverage increased 2.93 points year-on-year and decreased 3.52 points month-on-month to 191.66%, and the margin of safety is still high.
Investment advice: The company's current stock price corresponds to 2024E, 2025E PB 0.56X/0.52X; PE5.89X/5.82X. The company's overall operation is steady, and the asset quality performance is stable. The company's valuation safety margin is high, and the dividend rate is high, undervaluation is high ROE, so it is recommended to keep an eye on it.
Note: Based on the published annual report, we have fine-tuned profit forecasts and expect net profit to be 231.9 billion and 234.6 billion dollars for 2024-2025 (previous values were 25.8 billion and 263.5 billion yuan).
Risk warning: The economic downturn exceeded expectations, and the company's operations fell short of expectations.