Incident: Rui Fung Bank released its quarterly results, achieving operating income of 1.06 billion yuan (+15.3% YoY), net profit to mother of 40 million yuan (YoY +14.7%), and a non-performing rate of 0.97% at the end of March, which was the same.
Performance: High scale+investment income supports both revenue and profit growth. Rui Fung Bank's revenue growth rate in the first quarter reached 15.3% year on year, and the growth rate increased 7.4pc from month to month. Net profit to mother grew by 14.7%, and the growth rate also increased slightly by 1.7 pc from month to month. Take a look at it specifically:
1) Net interest income: +5.6% year-on-year in the first quarter, with a growth rate of +9.8pc month-on-month, mainly supported by 12.6% year-on-year increase in loans. Net interest spreads fell 13 bps to 1.60% month-on-month in the first quarter, mainly because competition for small and micro loans was still fierce since the beginning of the year, but on a year-on-year basis, the 24Q1 interest spread fell 28 bps year over year, which was narrower than the 23A decline of 48 bps, which also provided some support for the recovery in net interest income.
2) Non-interest income: The first three quarters increased 51% year on year (+1 billion year on year), mainly due to excellent financial market business performance. Investment income+fair value change gain/loss plus net exchange profit and loss totaled 289 million yuan, an increase of 100 million over the previous year. It is expected that the Q1 bond market mainly performed well and achieved a good range of returns.
Size: Q1 loans increased 8% from the beginning of the year
1) Asset side: At the end of March, total assets reached 206.5 billion yuan (+4.9% month-on-month), and loans reached 122.5 billion yuan (+8.0% month-on-month, +12.6% year-on-year). Of the net increase of 9.1 billion in Q1 loans, public and retail loans increased by 6.1 billion yuan and 600 million yuan respectively, while notes increased by 2.4 billion yuan.
2) Debt side: At the end of March, the deposit volume reached 15.5 billion yuan, up 6.3 billion yuan (+4.4%). Demand deposits decreased by 2.4 pc to 29.5% compared to the beginning of the year. Mainly, residents' regular savings were strong at the beginning of the year, and personal time deposits increased 6.8 billion yuan (+8.0%) month-on-month
Asset quality: Overall, it remains stable.
At the end of March, the defect rate was 0.97%, the month-on-month flat, the attention rate was 1.37%, and the month-on-month increase was 7 bps. The Q1 provision plan was raised to 350 million, an increase of 85 million over the same period last year. The main reason was that loans grew rapidly, and the provision requirement was raised accordingly. At the end of March, the provision coverage rate was 305%, and the loan ratio was 2.96%. In the face of the high increase in loans, it was still basically the same as at the beginning of the year.
Investment advice: The company's revenue and profit growth rate remain at the leading level in the industry. Looking forward to the future, Ruifeng's regional loans are expected to maintain steady growth. Ruifeng Bank's own market share has room to increase. At the same time, with the steady improvement of asset quality, it is also expected to open up room for profit release. Performance performance may continue to lead the industry. It is expected to achieve a return profit of 19.13/21.73/2,485 billion in 2024-2026, respectively, giving it a “buy” rating.
Risk warning: macroeconomic downturn; competition in small and micro businesses exceeds expectations; consumption recovery falls short of expectations.