浦发银行(600000):利润超预期 分红迎提升

SPD Bank (600000): Profit exceeds expectations, dividends welcome increase

浙商證券 ·  Apr 29

SPD's 24Q1 net profit was +10% year-on-year, exceeding market expectations; the dividend ratio increased by 10pc to 30%.

Overview of the data

SPD Bank's net profit for 24Q1 increased 10.0% year on year, and profit declined to increase; revenue fell 5.7% year on year, down 2.3 pc from 23A. SPD Bank's defect rate at the end of 24Q1 was 1.45%, an improvement of 3 bps from the end of 23Q4; the provision coverage rate decreased by 3 pc to 170% compared to the end of 23Q4.

Profit exceeds expectations

SPD Bank's net profit for 24Q1 increased 10.0% year on year, and profit declined to increase. After deducting non-net profit, it increased 31% year on year, exceeding market expectations. In terms of drivers, it was due to significant improvements in interest spreads and impairment drag. (1) Looking at interest spreads, the 24Q1 interest spread (at the beginning and end of the period, same below) remained flat at 1.41% month-on-month. (2) Looking at impairment, 24Q1 impairment losses decreased by 20% year-on-year, and the decline was 21pc better than 23A, supporting profits. Looking ahead to the whole year, SPD Bank's revenue decline is expected to narrow due to the strength of measures to stabilize interest spreads, compounded by the impact of a low base.

Net interest spread stabilized

In 24Q1, SPD Bank's interest spread remained flat at 1.41% month-on-month. Thanks to stable asset-side returns, superimposed interest-bearing assets grew faster than supported by interest-paying liabilities.

(1) The return on the asset side fell slightly by 1bp to 3.63% month-on-month, partly due to continued improvements in the asset structure.

24Q1 SPD Bank focused on the “five major tracks” and promoted strategic transformation to drive continued restoration of loan investment momentum and asset structure improvement. At the end of 24Q1, Pudong Development Bank's loans increased 3.4% month-on-month, and the growth rate was 2.8 pc faster than total assets.

(2) The debt-side cost ratio increased slightly by 1 bps to 2.25% month-on-month, and debt costs remained basically stable. ① In terms of structure, in 24Q1, SPD Bank stepped up efforts to control debt costs, actively reduced high-interest public deposits, and vigorously consolidated the retail customer base. At the end of 24Q1, Pudong Development Bank's corporate time deposits fell 5.4% month-on-month, and personal demand deposits increased 12% month-on-month. ② Looking at interest rates, deposit cost control results are evident. In 24Q1, SPD Bank's RMB deposit cost ratio improved by 12 bps year on year, and the improvement was wider than 23A's 8 bps.

Defects have improved

At the end of 24Q1, SPD Bank's non-performing rate was -3 bps to 1.45% month-on-month, reaching the best level since 2015. At the end of 24Q1, the attention rate rose slightly by 2 bps to 2.35% month-on-month. The judgment was mainly related to the upward trend in real estate and retail risk.

Dividends welcome increase

In the 2023 annual report, SPD Bank announced a dividend of 0.32 yuan per share, increasing the dividend ratio by 10pc to 30% over the same period last year, taking the initiative to increase shareholder returns.

Profit forecasting and valuation

The net profit of SPD Bank is expected to increase 10.22%/5.58%/6.30% year-on-year in 2024-2026, corresponding to BPS21.87/22.79/23.77 yuan. The current price corresponds to 0.34/0.33/0.31 times PB. Maintain a target price of 9.06 yuan, corresponding to PB 0.41x in 2024, with a current price space of 22%, maintaining a “buy” rating.

Risk warning: The macroeconomic economy has stalled, and the bad situation has been greatly exposed.

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