The 24Q1 revenue growth rate rebounded slightly, and profit growth declined. The cumulative year-on-year growth rates of 23A/24Q1 revenue, PPOP, and net profit of the Shanghai Agricultural Commercial Bank were -1.4pct/+0.6pct, -5.0pct/+2.7pct, and -5.2pct/-9.2pct compared with 23Q3/23A, respectively. Looking at the breakdown, the year-on-year growth rate of 24Q1 net interest income fell 1.7 pct to -2.0% from the end of 23; in the context of integrated insurance reporting and reduction of public offering fees, the net handling fee growth rate fell sharply by 29.0 pct to -23.7% year over year at the end of 23; the year-on-year growth rate of other non-interest income was impressive, further increasing 39.3 pcts to 66.1% on a high base.
The pace of table expansion is steady, and the advantages of science and innovation finance have been consolidated. As of 24Q1, the total assets and loans growth rate of the Shanghai Agricultural Commercial Bank increased by 0.5 pct and 0.1 pct, respectively, from the end of 23. The scale was steadily expanding. The increase in credit mainly came from public loans and notes. Among them, science and innovation finance, as a characteristic business, had a year-on-year growth rate of nearly 30%. The 24Q1 loan balance exceeded 100 billion dollars, up 11.2% from the beginning of the year, and its competitive advantage continued to be consolidated.
Interest spreads have narrowed moderately, and debt costs have improved. The net interest spread for 23 fell 5 bps to 1.67% from 23H1. Looking at the breakdown, loan yield fell 14 bps from 23H1, dragging down the yield on interest-bearing assets by 8 bps; the share of personal time deposits was basically stable, and the effect of superimposing deposit listed interest rates gradually became apparent. The deposit cost ratio decreased by 3 bps compared to 23H1, and the overall interest-bearing debt cost ratio improved by 2 bps.
The overall quality of assets is stable, and provision coverage has declined. The 24Q1 defect rate increased by 2 bps to 0.99% at the end of 23, and the concern rate increased by 4 bps to 1.27%. At the end of 23, the ratio of bad loans to public and personal loans was -3 bps and +18 bps, respectively, compared to 23H1. There was a marked increase in bad personal loans, or short-term disturbances from consumer credit. The 24Q1 estimated credit cost ratio was 0.47%. At the end of '23, the provision coverage rate dropped by 23.1pct to 381.8%, which fed back sufficient profit margins.
Considering this year's special credit needs, pricing environment, and the company's 24Q1 performance, we raised the growth rate of non-interest income and lowered core assumptions such as interest spreads and mid-income growth, and predicted that the company's 24/25/26 net profit growth rate would be 4.7%/6.1%/7.5% year-on-year, EPS would be 1.32/1.40/1.50 yuan, and BVPS would be 12.62/13.65/14.76 yuan (the original forecast value for 24/25 was 12.94/14.53 yuan). The current stock price corresponds to 24/25/26 PB 0.52X/0.48X/0.45X. Comparatively, the 24-year PB adjusted average was 0.57 times, corresponding to a reasonable value of 7.16 yuan/share, maintaining a “buy” rating.
Risk warning
Economic recovery fell short of expectations; demand for credit fell short of expectations; asset quality deteriorated.