Driven by improvements in non-interest income, revenue growth rebounded against the trend. The cumulative year-on-year growth rates of 23A/24Q1 revenue, PPOP, and net profit to mother were -3.9 pct/+6.4 pct, -3.2 pct, and -12.0pct/-3.2pct compared with 23Q3/23A, respectively.
The absolute growth rate of 24Q1 revenue reached 11.7%. In terms of the narrowing of interest spreads, 24Q1 net interest income fell 1.5pct to -0.8% year-on-year from the end of 23; net handling fee revenue continued to grow negatively, but the magnitude narrowed significantly by 14.8 pcts from the end of 23; thanks to the good performance of the bond market in the first quarter, the year-on-year growth rate of other non-interest income further increased to 74.9% from the high base of the same period last year, a significant improvement of 30.8 pct from the end of 23.
Maintain a high increase in public loans to support the expansion of the balance sheet. As of 24Q1, the Bank of Jiangsu's total assets and loan growth rates increased by 0.9 pct and 0.8 pct, respectively, compared to the end of 23. Judging from the credit structure, public loans maintained a year-on-year growth rate of nearly 20%. Key areas such as technology, inclusive small and micro, and green loans all increased by more than 25% throughout the year, and the market share of small and micro loans remained the highest in Jiangsu Province. The year-on-year growth rate of individual loans declined 3.8 pcts from the end of 23.
Interest spreads declined at an accelerated pace in 23 due to negative pressure on both sides of capital. The net interest spread for 23 fell 30 bps to 1.98% from 23H1. When split, the yield on interest-bearing assets fell 10 bps from 23H1, mainly the yield on loans fell by 14 bps; the cost ratio of interest-bearing debt rose by 4 bps compared to 23H1, and the trend of deposit regularization continued. The share of savings deposits increased by 2.0 pct compared to 23H1, and the overall deposit cost ratio increased 7 bps.
The non-performing rate has reached a record low, and provisions remain high. The 24Q1 defect rate was 0.91%, flat at the end of '23, the lowest level since listing, and the attention rate rose 3 bps from the end of '23. The estimated credit cost ratio of 23A/24Q1 was +1bp/2bp compared to 23Q3/23A, respectively, and the provision coverage rate was +16.1pct/-6.9pct, respectively, maintaining a high level of more than 370%. The overall provision continued to be consolidated, and there was sufficient profit margin.
Taking into account this year's special credit needs, pricing environment, and the company's 24Q1 performance, we raised core assumptions such as the growth rate of non-interest income, lowered interest spreads and loan growth, and predicted the year-on-year growth rate of the company's net profit to mother in 24/25/26 was 15.1%/14.4%/15.9%, EPS was 1.76/2.02/2.35 yuan, and BVPS was 12.85/14.44/16.3 yuan (the original forecast value for 24/25 was 12.43/14.31 yuan). The current stock price corresponds to 24/25/26 PB 0.66X/0.58X/0.52X. Considering the outstanding performance of the company and the fact that convertible bonds continued to provide strong support for asset investment after the smooth conversion of shares, compared to comparable companies, they maintained a 20% valuation premium, or 0.83 times PB in 24 years, corresponding to a reasonable value of 10.62 yuan/share, maintaining a “buy” rating.
Risk warning
Economic recovery fell short of expectations; demand for credit fell short of expectations; asset quality deteriorated.