Profitability remains at a good level. Revenue for the full year of 2023 was 74.3 billion yuan (YoY, +5.3%), net profit attributable to mother of 28.8 billion yuan (YoY, +13.3%), and the weighted average ROE for the whole year was 14.25%. Revenue for the first quarter of 2024 was 21 billion yuan (YoY, +11.7%), and net profit to mother of 9 billion yuan (YoY, +10.0%). High increases in other non-interest income led to double-digit year-on-year revenue growth in the first quarter. Other non-interest income in 2023 increased 44.1% year on year, and increased 74.9% year on year in the first quarter of 2024. On the one hand, it benefited from declining bond yields, and on the other hand, the company increased debt investment. Dragged down by the decline in agency business fee revenue, net fee revenue fell 31.6% year on year in 2023 and 16.8% year on year in the first quarter of 2024.
The scale has been expanding steadily, the pace of credit expansion has slowed slightly, and the narrowing of net interest spreads has dragged down net interest income. The company's net interest income increased 0.7% year on year in 2023, and decreased 0.8% year on year in the first quarter of 2024, mainly due to the repricing effect after the decline in LPR and the decline in interest rates on newly issued loans, putting pressure on yield on interest-bearing assets. In 2023, the company disclosed a net interest spread of 1.98%, a year-on-year narrowing of 34 bps.
The company's total assets increased 14.2% year over year in 2023, with loans growing 12.3% year over year. At the end of March 2024, total assets reached 3.67 trillion yuan, and total loans reached 1.90 trillion yuan, up 15.1% and 13.1%, respectively. Loans have achieved good growth, but the growth rate has slowed slightly, mainly due to the decline in the size of corporate mortgages. Retail loans increased by only 6.8% in 2023, while corporate loans achieved a good 19.9% increase.
Asset quality remained stable, and with double-digit revenue growth in the first quarter of 2024, the company increased debt and credit impairment charges. The 2023 non-performing rate was 0.91% and remained flat at the end of March 2024. The estimated 2023 non-performing loan generation rate was 1.06%, which rebounded slightly. At the end of 2023, the attention rate was 1.34%, and the overdue rate was 1.07%, up 5 bps and 8 bps respectively from the end of June, and slightly increased to 1.37% and 1.10% at the end of March 2024. Although the indicators increased slightly, the overall level was still good, and the asset quality was stable.
In terms of provision, asset impairment losses for the full year of 2023 decreased by 14.9% year on year, and total asset impairment losses increased 15.3% year on year in the first quarter of 2024, mainly due to a decline in non-credit asset impairment losses in 2023, but in the first quarter of 2024, credit impairment charges for non-credit assets were also increased in the first quarter of 2024. Credit asset impairment losses have remained stable. At the end of March 2024, the company's provision coverage rate remained high at 371%.
Investment advice: Due to the continuous decline in LPR, we lowered our 2024-2026 net profit forecast to 317/354/40.6 billion yuan (the original forecast for 2024-2025 was 345/39.4 billion yuan). The corresponding year-on-year growth rate was 10.2%/11.9%/14.6%. Supported by regional advantages, the company's size has been expanding rapidly, and the asset quality is steady. The successful conversion of bonds to shares provided strong support for continued rapid table expansion. At the end of the first quarter of 2024, the company's core capital adequacy ratio was 9.2%, and the capital adequacy ratio was 12.8%. Maintain a “buy” rating.
Risk warning: Macroeconomic recovery falls short of expectations and will drag down the company's net interest spreads and asset quality.