The revenue growth rate is leading the industry, and the sharp year-on-year increase in asset impairment losses has led to a decline in the growth rate of net profit to mother.
The company achieved revenue of 18.4 billion yuan in the first quarter of 2024, an increase of 16.6% over the previous year, an increase of 12.3 percentage points over the full year of 2023. Net profit due to mother was 5.9 billion yuan during the same period, up 5.1% year on year, down 5.4 percentage points from the growth rate for the full year of 2023. Mainly, asset impairment losses increased 38.1% year on year. The company's annualized weighted average ROE was 14.39%, down 1.6 percentage points year over year.
Net interest income increased by only 0.6% year over year, and the high increase in other non-interest income led to a good increase in revenue. Non-interest revenue in the first quarter increased 63.34% year over year, with net revenue from handling fees and commissions falling 3.4% year over year. Other non-interest revenue for the first quarter was 5.1 billion yuan, up 105% year on year, accounting for 27.7% of revenue, up 11.9 percentage points year over year. When the traditional deposit and loan business was affected by narrowing interest spreads, the company actively adjusted its asset allocation, seized trading opportunities in the financial market, and achieved good revenue growth.
The pace of credit investment is steady, and the narrowing of net interest spreads is dragging down net interest income. At the end of the period, the company's total assets were 3.16 trillion yuan, total loans were 1.77 trillion yuan, and total deposits were 1.89 trillion yuan, up 0.57%, 3.10% and 1.26% respectively from the beginning of the year. The company disclosed a net interest spread of 1.84% for the first quarter, a year-on-year narrowing of 26 bps, down 17 bps from the full year of 2023. The company's net interest spread declined significantly in the first quarter. It is expected that the company's government loans account for a relatively high share, and the first quarter was greatly impacted by the repricing of LPR's downside loans. As a result, the decline in net interest spreads is expected to narrow in the next three quarters of 2024 and is expected to improve.
The quality of loans is stable, and it is expected that credit risk impairment charges for non-credit assets will be increased. The defect rate at the end of the period was 1.44%, the same as at the beginning of the year. The company's asset impairment impairment losses increased by 38.1% year on year, but the year-end provision coverage rate decreased by 5.1 percentage points to 177.5% from the beginning of the year. It is expected that the company will increase its provision plan for non-credit assets to consolidate asset quality in all aspects.
Investment suggestions: The company's regional advantage is obvious, and the proposed “weakly sensitive economic cycle” strategy has achieved remarkable results. We maintain the 2024-2026 net profit forecast of 164/182/202 billion yuan, corresponding to a year-on-year growth rate of 9.3%/10.7%/10.8%; diluted EPS is 0.58/0.65/0.72 yuan; PE corresponding to the current stock price is 4.8/4.3/3.9x, and PB is 0.44/0.41/0.38x, maintaining the “gain” rating.
Risk warning: The weakening macroeconomic situation may adversely affect the quality of bank assets.