Revenue continued to grow positively. The first quarter of 2024 achieved operating income of 89.4 billion yuan, up 1.4% year on year. The growth rate fell 0.9 percentage points from last year's annual report, and continued to maintain positive growth; of these, net interest income was 71.6 billion yuan, up 3.1% year on year; net profit to mother was 25.9 billion yuan in the first quarter, down 1.3% year on year, and the growth rate fell 2.5 percentage points from last year's annual report.
The asset growth rate remains stable. At the end of the first quarter of 2023, total assets increased 11.1% year-on-year to 16.3 trillion yuan, and the growth rate was relatively stable. Among them, deposits increased 10.5% year over year to 14.6 trillion yuan, and total loans increased 11.8% year over year to 8.5 trillion yuan. The core Tier 1 capital adequacy ratio at the end of the first quarter was 9.41%, a slight decrease of 0.12 percentage points from the beginning of the year.
Net interest spreads rebounded slightly from month to month. The company's average daily net interest spread for the first quarter of 2024 was 1.92%, a year-on-year decrease of 17 bps, mainly due to the effects of the quarterly decline in net interest spreads last year. On a month-on-month basis, net interest spreads for the first quarter of this year rebounded by 2 bps compared to the fourth quarter of last year.
Net revenue from handling fees decreased year over year. Net revenue from handling fees fell 18.2% year-on-year to 9.5 billion yuan in the first quarter of 2024, mainly affected by the “integrated reporting and banking” policy, and the decline in agency insurance business revenue, which is in line with industry trends. The company disclosed that business revenue such as investment banking, transaction banking, and corporate finance has grown rapidly.
Asset quality is under marginal pressure. The company's non-performing loan ratio at the end of the first quarter of 2024 was 0.84%, up 0.01 percentage points from the end of the previous year; the share of concerned loans was 0.71%, up 0.03 percentage points from the end of the previous year; and the overdue rate was 0.99%, up 0.08 percentage points from the end of the previous year. The provision coverage rate at the end of the first quarter was 327%, down 21 percentage points from the end of the previous year. The company disclosed an annualized non-performing loan generation rate of 0.81% for the first quarter, an increase of 0.05 percentage points over the previous year. Overall, the quality of the company's assets is under marginal pressure.
Investment advice: We keep our profit forecast unchanged. We expect the company's 2024-2026 net profit of 867/905/94.7 billion yuan, a year-on-year growth rate of 0.5/4.4/ 4.6%; diluted EPS of 0.82/0.86/0.90 yuan; current stock prices correspond to PE of 5.8/5.5/5.3x and PB of 0.56/0.52/0.49x, maintaining a “buy” rating.
Risk warning: The weakening macroeconomic situation may adversely affect the quality of bank assets.