Financial report summary: The performance growth rate declined in January and 23, and 24Q1 revenue and profit maintained a double-digit growth rate. 1Q24 revenue +11.6% YoY (vs 2023 YoY +5.3%), 1Q24 net profit +10% YoY (vs 2023 YoY +13.3%). Revenue growth is marginally upward, net profit growth is marginally downward, and the performance growth rate is still leading the industry. 2. The net interest income for 1Q24 was +17.68% month-on-month, and the capital burden jointly supported the net interest spread +23bp to 1.83% month-on-month; there are also reasons for 4Q23's low base. The return on the asset-side rose 16 bps to 4.43% month-on-month; the investment structure is mainly for Gonggong. It is expected that during the good start period at the beginning of the year, more long-term loans were invested, and the pricing was relatively high. The debt-side interest rate declined by 10 bps to 2.47% month-on-month, which provided some support for interest spreads and supported debt-side optimization. 3. Growth rate and structure of assets and liabilities: In 1Q24, both deposits and loans were strong, providing strong support for public deposits and loans. (1) Assets: Interest-bearing assets for the full year of 2023 were +13.9% year-on-year, and loans increased 12.3% year-on-year. The growth rate was slightly slower than in 2022. 1Q24 added 101.9 billion new loans in a single quarter, an increase of 23.5 billion yuan over the same period in 1Q23, and was a good start. In terms of credit structure, the full year of 2023 and 24Q1 mainly relied on countervailing efforts: +19.9% compared to the same period in 2023, retail sales and notes declined, adding 152.8 billion, -16.6 billion, and -44.3 billion respectively. Due to seasonal patterns in public and retail investment, the share of the Bank of Jiangsu to the public was generally the highest in the first quarter, and the share of retail sales may rise later (the second half of 23). Specifically, the public retail structure: On the public side, the share of infrastructure and manufacturing stocks increased steadily in 2023, and real estate declined steadily; on the retail side, the share of mortgages declined, and the share of consumer loans increased slightly, showing significant momentum in the second half of the year; among them, the consumer spending scale increased by 13.9 billion to 38.65 billion yuan throughout the year, and profit contribution increased steadily. (2) Liabilities: 2023 interest-bearing debt +13% YoY, deposit +15.4% YoY. 1Q24 interest-bearing liabilities increased 13.2% year over year, and deposits increased 14.5% year over year.

1Q24 deposits increased by 207.7 billion in a single quarter, an increase of 13.6 billion over the same period last year. Among them, public deposits increased by 184.2 billion yuan month-on-month. Although there are seasonal factors, there was also an increase of 124 billion dollars over the same period in 1Q23. It can be seen that public deposits have improved markedly since the beginning of the year. In terms of fixed activity period, the trend of regularization slowed down at the end of 2023, and the overall regular share remained at 59.7% of 1H23. At the end of 2023, corporate activity and individual regularity achieved a year-on-year high increase. 4. Non-interest: 1Q24 net non-interest income increased 45.3% year on year (vs 2023, up 18.3% year on year), and the year-on-year growth rate increased marginally. Among them, net handling fees were -16.9% YoY (vs 2023 -1.6% YoY), and the decline narrowed; net other non-interest charges increased 74.8% yoy (vs2023 44.5% YoY). Net fee revenue for the full year of 2023 decreased by 31.6% year-on-year, and the decline widened. 5. Asset quality: The non-performing rate remains stable, and the margin of safety remains high. The defect rate for 1Q24 and 2023 both remained low at 0.91%. Net bad generation increased by 18 bps to 1.10% month-on-month in 2023, and net bad generation fell to 0.73% in 1Q24, which is in a low position. The 1Q24 provision coverage rate fell 6.90% month-on-month to 371.22%, maintaining a high level. Defect rate in various industries: (1) To public: To public defect rate (estimate) fell 1 bp to a low level of 0.96% month-on-month. The real estate non-performing rate increased by 46 bps to 2.54% month-on-month, but the company's real estate loans account for a small share and are manageable overall. (2) Retail: The retail defect rate (financial report) fell 12 bps month-on-month to 0.79%. Bad personal business loans increased slightly by 12 bps to 1.79% compared to 1H23, but the size of personal business loans was smaller, at 53.3 billion, and was 5.4% lower than the 1H23 scale. The increase in the non-performing rate was also influenced by factors where the denominator became smaller, and the risk is still manageable. 6. Business: Inclusive small and micro maintained high growth; retail AUM exceeded 1.2 trillion yuan, up 15.3% year on year, and financial and private AUM reached 360 billion yuan, up 20% year on year. 7. Others: Core Tier 1 capital adequacy ratio increased month-on-month; dividend rate maintained at 30% in 2023. The company's shareholders' meeting authorized the board of directors to decide on the 2024 mid-term profit distribution bill.

Based on published financial reports, we have adjusted our profit forecast and expect net profit to be 32.5 billion and 35.9 billion yuan for 2024-2025 (previous values were 36.5 billion and 41.7 billion yuan).

Investment advice: Strong continuous performance growth and high cost performance ratio. 2024E, 2025E, 2026E PB0.6X/0.54X/0.48X; PE4.49X/4.04X/3.65X In an uncertain macro environment, the Bank of Jiangsu has shown strong growth resilience. The company's operation is steady and pragmatic, the management is stable, the business area is excellent, the organizational structure and business structure are mature and excellent, and it can become an excellent bank in the medium to long term.

For details on the characteristics and core competitiveness of the Bank of Jiangsu, see our previous in-depth reports “Bank of Jiangsu: Deeply Cultivating Jiangsu, a Moat with High-End Manufacturing and Small and Medium Business Loans” and “Bank of Jiangsu Will Reach the Market — Core Competitiveness and Sustainability Research”.

Risk warning: The economic downturn exceeded expectations, and the company's operations fell short of expectations.