Key points of investment
Event: The company released its 2023 annual report. In 2023, the company achieved operating income of 342.5 billion yuan (+2.25%, YoY) and net profit to mother of 86.3 billion yuan (+1.23%, YoY). At the end of 2023, the company's total assets were 15.73 trillion yuan (+11.80%, YoY), the non-performing loan ratio was 0.83%, and the non-performing loan provision coverage ratio was 347.57%. Among the large state-owned commercial banks, the Postbank is one of the few banks that achieved year-on-year revenue growth, showing good operational resilience.
Loans are growing strongly, and the retail sector is growing significantly faster than the industry. In 2023, Postbank loans increased by 938.460 billion yuan, an increase of 13.02% over the previous year. On the retail side, benefiting from differentiated growth pole strategies and customer base advantages, fields such as personal business loans, consumer loans, and credit card loans grew rapidly, driving the proportion of new loans increased significantly to 45.20%. Affected by the slowdown in housing demand, personal housing loans are growing slowly. Public loans have grown rapidly along with the industry. 2023Q4. Despite a slowdown in credit investment in the banking sector, the company maintained strong investment due to the customer base advantages of major retail banks.
Interest spreads have narrowed with the industry, and deposit cost control is clearly better than that of peers. In 2023, the company's net interest spread narrowed by 19bp to 2.01% compared to 2022. On the margins, it is estimated that the net annualized interest spread for a single quarter in Q4 was 1.90%, down 9bp from Q3. Among them, the yield on the asset side declined by 10 bps, which is expected to be affected by stock housing loan interest rate cuts and LPR repricing; on the debt side, although interest rates on deposit listings were lowered several times during the year, it was affected by the “regularization” of deposits, and Q4 fell only slightly by 1 bp from month to month. Looking at the whole year, the deposit cost control effect of Postbank was significantly better than that of comparable companies. The average deposit interest rate for the year dropped by 8 bp to 1.53%.
Diversification of intermediary business has yielded good results. In 2023, the company's net revenue from handling fees and commissions totaled RMB 28.252 billion, an increase of 12.05% after excluding one-time factors in the transformation of net wealth management products in 2022, which is significantly better than the industry. By project, agency business revenue benefited from the company's differentiated strategies and improved asset allocation capabilities in the field of wealth management, which increased 24.16% year over year. Revenue from the financial management business declined by 62.91% due to one-time factors in the transformation of net wealth management products in 2022. Revenue from the bank card business was basically stable, with an increase of 0.36%. Clearing and clearing business revenue increased 7.29%. The company strengthened the promotion of joint Tier 1 bond financing and other businesses between commercial banks and investment banks, and investment banking fees increased sharply by 42.91%. Revenue from other businesses increased by 68.79%, mainly due to rapid growth in businesses such as off-balance sheets and supply chain financing.
The quality of assets is excellent, and the ability to offset risks remains high. At the end of 2023, the Postbank's non-performing loan ratio was 0.83%, a slight decrease of 1 bps from the end of 2022. On a marginal basis, it was a slight increase of 2 bps from the end of Q3. By sector, the non-performing ratio of public loans increased by 2 bp to 0.55% compared to the end of June, mainly affected by the rise in the non-performing rate in the real estate industry. The non-performing rate in other industries is generally stable. The retail loan non-performing ratio rose slightly by 3 bp to 1.12%, mainly affected by a slight increase in the non-performing ratio of operating loans and mortgage loans. Overall, fluctuations in non-performing rates in major industries are within a manageable range. At the end of 2023, the Postbank's non-performing loan provision coverage rate was 347.57%, and overall risk offsetting capacity remained high.
Profit forecast and investment advice: The company has customer advantages in the fields of retail, inclusiveness, agriculture, green, etc., and the scale growth is expected to be faster than that of comparable major banks. The company's areas of advantage are strongly supported by national policies. Interest rates on related loan types may decline further with the market. Combined with LPR repricing, it is expected that net interest spreads will still be under pressure. In view of the slowdown in loan interest rate cuts, deposit repricing will also ease pressure on the debt side, and the net interest spread slope is expected to slow down. The company's historical burden is small, the customer base is good, risk management is solid, and asset quality is expected to remain excellent. The company's revenue for 2024-2026 is estimated to be 3,500, 3694, and 394.1 billion yuan, respectively, with corresponding growth rates of 2.19%, 5.55% and 6.69%, and net profit to mother of 884, 943, and 99 billion yuan respectively. The corresponding growth rates are 2.51%, 6.61% and 4.95%, respectively. The net assets per share of common shareholders at the end of the period are 8.46, 9.01 and 9.58 yuan, corresponding to the closing price of 4.60 yuan on April 12, 0.54, 0.51 and 0.48 times 0.48 times, respectively. In view of the company's good customer base, outstanding retail transformation results, excellent asset quality, stable dividend ratio, and first coverage, it was given an “increase in wealth” rating.
Risk warning: Asset quality has deteriorated dramatically, loan interest rates have declined sharply, deposit regularization has intensified, and scale growth falls short of expectations.