Introduction to this report:
Bank of Beijing's 2023 annual report results are generally in line with expectations. The revenue growth rate recovered in 2023, credit growth was strong, the effects of retail transformation were prominent, the retail line's contribution increased, supported asset-side pricing performance, and maintained an increase in holdings ratings.
Key points of investment:
Investment advice: Taking into account the 2023 financial report and 2024 credit volume and price trend forecast, adjust the 2024-2026 net profit growth forecast to 1.96%/3.55%/4.92%, corresponding EPS to 1.08 (-0.12) /1.12 (-0.23) /1.19 (new) yuan. The target price was raised to 6.50 yuan, corresponding to 0.51 times PB in 2023, maintaining an increase in holdings rating.
Revenue growth is picking up, and credit growth is strong. The revenue growth rate in 2023 was 0.7%, up 3.9 pc from the previous three quarters. The Q4 revenue growth rate in a single quarter was 14.0%. Other non-interest net income was high, boosting revenue performance. The increase in the Q4 provision schedule increased, which dragged down profit performance. The net profit growth rate in 2023 was 3.49%, down 1.0pc from the previous three quarters. Loans increased by more than 12% in 2023, with loans to public loans reaching 16.6%, “specialty and new” corporate loans growing 187%, consumer loans and credit cards growing at 49.8% and 38.6% respectively in retail loans, with strong credit growth.
The effects of retail transformation are remarkable. Retail line revenue increased 10.21% year over year, and the bank's contribution increased by 3.64pc to 37.73% compared to 2022. The internal structure of retail loans was optimized. The share of consumer loans and operating loans increased by 6.61 pc compared to 2022, driving the yield of retail loans to increase by 9 bps, forming a certain support for asset-side pricing. The net interest spread remained the same as in the first half of the year, and the performance was superior to that of peers.
Asset quality is generally stable. The non-performing rate decreased by 1 bps to 1.32% from the end of Q3, and the provision coverage rate increased by 1.6 pc to 216.8% compared to the end of Q3. The loan ratio remained flat, and the core indicators were basically stable. In terms of forward-looking metrics, the attention rate increased by 28 bps compared to the end of June, and the overdue rate increased by 5 bps compared to the end of June.
Risk warning: Demand recovery falls short of expectations, and retail loan risks are exposed.