Strong credit investment, interest spreads increased month-on-month
Net profit, revenue, and PPOP for 24Q1 were +6.3%, +5.8%, and +9.0% year-on-year (year-on-year growth rates were +10.7%, +6.4%, and +3.2%, respectively). The 24Q1 annualized ROE and ROA were -1.39pct and -0.08pct to 15.51% and 1.00%, respectively. We expect the 24-26 EPS to be 4.20/4.65/5.24 yuan, and the 24-year BVPS forecast value is 30.31 yuan, corresponding to 0.75 times the PBX. Bank of Ningbo has an average PB (LF) value of 0.96 times in the past year (as of 24/04/29). The company's growth rate is high and operating and risk control endowments are outstanding, but considering the pace of recovery in physical demand remains to be seen, we have given a 24-year target PB1.00 times and a target price of 30.31 yuan, maintaining a “buy” rating.
Credit growth accelerated, and interest spreads picked up month-on-month
Total assets, loans, and deposits at the end of March were +14.3%, +24.2%, and +15.2%, respectively (the year-on-year growth rates in '23 were +14.6%, +19.8%, and +21.2%, respectively). Credit investment was strong, with additional loans of 109.4 billion yuan in Q1, up from 50.9 billion yuan in the same period last year. Structurally, the new loans added in Q1 mainly contributed to the public sector, with balance balances of +86.2 billion yuan, +13.7 billion yuan, and +9.4 billion yuan for public, retail, and bill balances, respectively. The 24Q1 net interest spread was 1.90%, up 2 bps from month to month. The estimate was mainly driven by improvements on the debt side. Net interest income grew positively in 24Q1, +12.2% year over year (+9.0% year over year 23). In 24Q1, deposits increased by 255.4 billion yuan, mainly driven by corporate deposits. New corporate and personal deposits accounted for 76% and 24% respectively.
Revenue continues to be under pressure, and costs are optimized
Non-interest income in 24Q1 was -4.7% YoY (+1.6% YoY for the full year of '23), and revenue growth continued to be under pressure.
Net revenue from fees and commissions in 24Q1 was -22.8% YoY (-22.7% YoY for the full year of '23). Revenue's contribution to revenue decreased by 3pct to 8.2% year over year, and revenue was still under pressure. 24Q1 Other Non-Interest Income +3.0% YoY (+15.7% YoY). Among them, investment income, fair value change gain/loss, and exchange gain/loss were +164 million yuan, +382 million yuan, and -145 million yuan, respectively. The company's operating efficiency was continuously optimized. The 24Q1 cost-revenue ratio was 31.6%, and -2.2 pct year over year. The capital adequacy ratio and core Tier 1 capital adequacy ratio at the end of March were 14.26% and 9.26%, respectively, compared with -0.75pct and -0.38pct at the end of 23, respectively.
The overall quality of assets is stable, and the attention rate fluctuates
The non-performing rate and provision coverage rate at the end of March were 0.76% and 432%, which was the same as at the end of 23, and -29pct, respectively.
The overall non-performing rate is stable, and although provision coverage has declined, it is still at a high level. Asset impairment losses for the first quarter were $3.91 billion, +5.5% year-on-year. Among them, impairment losses on loans were 160 million yuan less than in the same period last year, and non-credit increased by 360 million yuan compared to the same period last year. The estimated 24Q1 credit cost was 0.99%, -0.27pct year over year, driving profit release. The estimated bad generation rate increased. The annual bad generation rate in 24Q1 was 0.99%, an increase of 0.29 pct over 23Q4. Follow-up metrics fluctuated, with an attention rate of 0.74% at the end of March, +10bp compared to the end of 23.
Risk warning: Economic recovery fell short of expectations, and the deterioration in asset quality exceeded expectations.