Investment advice: Taking into account the 2023 financial report and 2024 credit volume and price trend forecast, adjust Zheshang Bank's 2024-2026 net profit growth forecast to 3.61%/6.57%/7.66%, corresponding to EPS 0.57 (-0.07) /0.60 (-0.13) /0.65 (new) yuan. The target price was lowered to 3.45 yuan, corresponding to 0.55 times PB in 2024, maintaining an increase in holdings rating.
The rate of table expansion increased, and credit growth remained high. The revenue growth rate in 2023 increased by 0.2 pc to 4.3% compared to the previous three quarters, and the Q4 revenue growth rate increased 1.8 pc month-on-month. The performance was superior to that of peers. The main contributing factor was scale expansion. Zheshang Bank's total asset growth rate in 2023 was 19.9%, 13 percentage points higher than the average of other stock banks. The credit performance was also impressive. The loan balance in 2023 increased 12.4% year on year, maintaining a high rate of table expansion.
Profit growth was strong. The net profit growth rate in 2023 was as high as 10.5%, 14 percentage points higher than the average of other listed stock banks. Credit costs fell 22bp year-on-year after bad burdens were reduced, supporting profit performance. The net interest spread in 2023 was 2.01%, a year-on-year narrowing of 20 bps. The absolute value is still at the top of the stock market. It is mainly dragged down by the interest-bearing asset side, and the interest-bearing debt side is basically stable.
Core asset quality indicators are stable, and forward-looking indicators have improved. Compared to the end of Q3, the defect rate decreased by 1 bp, and the provision coverage rate decreased by 0.34 pc, which is basically stable. The overdue rate, attention rate, and bad generation rate decreased by 14 bps, 3 bps, and 24 bps, respectively, from the end of June. By industry, the non-performing ratio decreased by 22 bps to 1.37% compared to the end of June, and the retail defect rate increased by 41 bps to 1.91%.
Risk Warning: Demand recovery fell short of expectations; retail loan risk exposure exceeded expectations.