Core views:
The Bank of Jiangsu released its annual report for the year 23 and the quarterly report for 2014. The 23A and 24Q1 revenue were 5.3% and 11.7%, respectively, and PPOP was 6.0% and 9.2% respectively. Net profit to mother increased 13.3% and 10.0% year-on-year respectively. Under the pressure of industry operations, the company's revenue growth rate rebounded sharply to more than 11%, exceeding investors' expectations.
Highlights: (1) Q1 revenue growth surpassed expectations. The company's 24Q1 revenue increased 11.7%, up from -7.1% in the 23Q4 single quarter. Judging from the driving factors, the sharp rebound in revenue growth was mainly a month-on-month rebound in interest spreads in a single quarter, a decrease in negative contributions to handling fee growth, and other non-interest revenue growth rates remained at a very high level. (2) Interest spreads recovered marginally in Q1 compared to 23Q4. 23Q1-24Q1 estimates net interest spreads of 2.09%, 1.95%, 1.95%, 1.60%, and 1.82%, respectively, with significant marginal improvement in 24Q1. The estimated return on interest-bearing assets and the cost ratio of interest-bearing debt in Q1 changed +16BP and -10BP from 23Q4, respectively. The rebound in interest spreads in Q1 is expected to be mainly due to good credit investment. Some high-yield loans account for a large share of investment. Loan investment was 101.9 billion yuan, an increase of 235 billion yuan over the previous year. Structurally, investment in public loans was 162.8 billion yuan, and retail loans decreased by 16.6 billion yuan. Debt-side deposits also increased by 207.7 billion yuan from the beginning of the year, of which corporate deposits increased by 184.2 billion yuan and personal deposits increased by 82 billion yuan. (3) Asset quality remains stable. The non-performing loan ratio at the end of March was 0.91%, the same as the end of December; the provision coverage rate at the end of March was 371%, slightly down 6.9PCT from the end of December, focusing on a slight increase of 3BP month-on-month to 1.37%; the overdue rate also increased by 3BP to 1.10% month-on-month; the estimated new bad generation rate was 0.73%, up 16BP from 23Q1, but decreased 37BP from 23A.
Attention: (1) Other non-interest income contributed significantly to 23Q4 and 24Q1 revenue. The company's 23Q4 and 24Q1 non-interest income were 4.1 billion yuan and 6 billion yuan respectively, up 141% and 75%, respectively. The contribution of other income and expenditure to revenue was 16.9% and 14.2%, respectively, and will fluctuate with subsequent fluctuations in the bond market. (2) Impairment loss 23Q4 began to resume year-on-year growth. 21A, 22A, and 23A impairment losses decreased 0.5%, 11.7%, and 14.9% year-on-year respectively. 23Q4 began to end five consecutive quarters of year-on-year decline and rebounded to a year-on-year increase of 8.4%. The 24Q1 growth rate rebounded to 15.3%. At the same time, the reduction in the provision ratio for non-credit assets was greater than that of loans. Looking at the end of '23, total assets, loan, financial investment, and other asset provisions balances/asset balances were 3.45%, 0.78%, and 1.13% respectively, with year-on-year decreases of 33BP, 5BP, 74BP, and 22BP, respectively.
Profit forecast and investment advice: The net profit growth rate for 23/24 is expected to be 9.9%/10.8%, EPS is 2.09/2.32 yuan/share, BVPS is 14.26/16.07 yuan/share, the stock price is 4.0X/3.6X for 23/24 PE, and 0.6X/0.5X for 23/24 PB. The company's assets are balanced, and the risk-weighted asset growth rate system rises after capital is replenished, and the long-term growth center is expected to increase. It was given 0.7 times PB for 24 years, with a reasonable value of 9.98 yuan/share, maintaining a “buy” rating.
Risk warning: (1) Macroeconomics declined more than expected, and asset quality deteriorated sharply. (2) Consumption recovery fell short of expectations, and deposit regularization was serious. (3) Market interest rates are rising, and transaction books are at a loss.