Event: The company published its 2023 Annual Report and 2024 Quarterly Report.

Revenue performance was impressive, and profit levels remained steady: in 2023 and 2024Q1, the company's revenue increased 5.28% and 11.72% year over year, net profit to mother increased 13.25% and 10.02% year over year; the annualized weighted average ROE was 14.52% and 15.38%. The company's revenue growth rate in the first quarter was impressive, and profits continued to grow rapidly, mainly from contributions from other non-interest income.

The growth momentum for public loans was strong, and the degree of regularization of personal deposits increased: in 2023 and 2024Q1, the company's net interest income changed 0.73% and -0.78% year on year, mainly due to declining interest spreads; in 2023, NIM was 1.98%, down 34BP year on year. 2024Q1 continues to be affected by declining pricing and the rigidity of debt costs, as reflected in the slowdown in interest income growth and a continuous sharp increase in interest expenses. Asset-side credit has been expanding steadily, growth in public loans is strong, and retail business performance is weak. By the end of 2023, the company's loans increased by 12.32% compared to 2022, and the 2024Q1 growth rate was 5.65%. Among them, public loans grew by 19.89% and 15.88%, maintaining rapid growth and strong support for key areas. The growth rate of technology enterprise loans, green credit, and inclusive small and micro loans reached 32.56%, 42.5%, and 25.27% in 2023, and the scale of small and micro loans exceeded 620 billion yuan, ranking first among banks in Jiangsu Province and urban commercial banks in the country; retail loans grew by 6.79% and -2.58%, which is expected to be affected by weak real estate sales and weak consumer loan demand. Debt-side deposits continued to increase, and the degree of regularization of personal deposits increased. By the end of 2023, the company's total deposits increased 15.39% compared to 2022, and the 2024Q1 growth rate was 11.07%; in 2023, personal time deposits increased by 37.9%, accounting for 32.82% of total deposits, an increase of 5.35 percentage points over 2022.

Non-interest income achieved a high increase in the first quarter, and the contribution to investment revenue increased: in 2023 and 2024Q1, the company's non-interest income increased 18.26% and 45.48% year-on-year. Among them, intermediary business revenue declined by 31.6% and 16.82% year-on-year, and is expected to continue to be affected by the decline in agency fee revenue. Retail wealth management is developing well. By the end of 2023, the company's retail sales volume was 1.24 trillion yuan, an increase of 16.11% over 2022; of these, wealth and private banking customers aum was nearly 350 billion yuan, and the growth rate was over 20%. The sharp increase in income from the investment business led to a high increase in other non-interest income. In 2023 and 2024Q1, the company's other non-interest income increased 44.12% and 74.88% year over year; investment income increased 121.21% and 39.04% year over year; and income from changes in fair value increased 38.2% and 18.36% year over year.

Asset quality remained steady: As of the end of March 2024, the company's non-performing loan ratio was 0.91%, the same as in 2023, and is at the best level in the industry; the provision coverage rate was 371.22%, down 6.91 percentage points from the previous year, and remained stable.

Investment advice: The company is deeply involved in the economically developed regions of Jiangsu. It has rich financial resources and broad development prospects. It has obvious service advantages in small, micro and manufacturing industries, and ranks first in the province in many business indicators. Credit investment in the table is increasing steadily, with strong growth momentum for public loans and deposits, leading the market share in the province; the retail business is steadily transforming, and wealth management is developing well. Asset quality is stable, moderate and improving. Based on the company's fundamentals and stock price flexibility, we gave it a “recommended” rating. The 2024-2026 BVPS was 12.68 yuan/13.99 yuan/15.48 yuan, corresponding to the current stock price PB of 0.62X/0.56X/0.51X.

Risk warning: the risk that macroeconomic growth falls short of expectations and that asset quality will deteriorate.