Revenue maintained double-digit growth, and net profit to mother actually increased by about 20%. The first quarter of 2024 achieved revenue of 2.70 billion yuan (YoY, +12.01%) and net profit to mother of 950 million yuan (YoY, +19.80%). The growth rate of revenue and net profit to mother was the same as the growth rate for the full year of 2023. Judging from the factors contributing to performance, the expansion of scale and the slowdown in the growth rate of operating expenses were the main contributing factors, and the year-on-year narrowing of net interest spreads was the main drag factor.
The scale continued to expand well, and the decline in net interest spreads narrowed quarter by quarter. Net interest income increased 5.6% year over year in the first quarter of 2024. Among them, the net interest spread disclosed by the company was 2.83%, a year-on-year narrowing by 19 bps, down only 3 bps from the full year of 2023, and the decline in net interest spreads narrowed quarterly. Changshu Bank has been focusing on small and micro businesses for a long time. The proportion of mortgage loans is low, and the loan repricing cycle is short, so the pressure to reprice in 2024 is better than that of its peers.
At the end of March 2024, total assets were $364.7 billion, total loan amount (excluding accrued interest) of $235.2 billion, and total deposit amount (excluding accrued interest) of $283.5 billion, up 9.0%, 5.8%, and 14.3% respectively from the beginning of the year, and the scale continued to expand rapidly.
Public loans are growing strongly, and there is a clear trend of regularization of residents' deposits, but the company actively controls the deposit structure, and the share of savings deposits with a term of three years or more has declined. As for the loan structure, loans to public loans expanded by 10.2% compared to the beginning of the year, while personal loans expanded by only 2.3%. Deposit structure. The trend of fixed-term residents' deposits continues, but the company is actively strengthening the control of deposit costs, and the share of time deposits with a term of three years or more has declined. At the end of the period, term savings accounts for 88.6% of residents' deposits, accounting for 62.0% of total deposits, up 1.6 pcts and 1.3 pcts respectively from the beginning of the year. Of these, deposits with a term of 3 years or more accounted for 53.8% of total residents' deposits, down 3 pcts from the beginning of the year.
Interim income and other non-interest income both achieved good growth; the cost-to-revenue ratio declined year-on-year. The total non-interest revenue for the first quarter of 2024 increased 70%, accounting for 14.9% of revenue, an increase of 5 percentage points over the previous year. The cost-revenue ratio for the first quarter of 2024 was 35.3%, a year-on-year decrease of about 5 percentage points, and a decrease of 1.6 percentage points from the full year of 2023.
Asset quality remains excellent, provision accruals are sufficient, and the end-of-period provision coverage rate is 539%. The defect rate at the end of the period was 0.76%, up 1 bp from the beginning of the year; the attention rate was 1.24%, up 7 bps from the beginning of the year. Although it was a slight increase, the increase was small and the absolute level was low, and the quality of the company's assets was excellent. Asset impairment losses increased 21.1% year-on-year in the first quarter, and the end-of-period provision coverage rate was 539%, up about 1 pct from the beginning of the year, ranking among the top listed banks.
Investment advice: The company's small and micro businesses have the ability to cross the cycle. The growth rate of revenue and net profit to mother continues to be among the highest in the industry, asset quality is excellent, and provision coverage is high. We maintain the 2024-2026 net profit forecast of 39.0/45.9/5.60 billion yuan, corresponding to a growth rate of 19.0%/17.5%/22.1%, diluted EPS of 1.42/1.67/2.04 yuan, corresponding PE value of 5.3/4.5/3.7x, and corresponding PB value of 0.72/0.63/0.55x, maintaining a “buy” rating.
Risk warning: Macroeconomic recovery falls short of expectations and will drag down the company's net interest spreads and asset quality.