Quarterly Report Overview: The company stepped up cost control efforts. PPOP increased 5.4% year-on-year. Net profit increased negatively under the influence of a high base due to large settlements in the same period last year, and the annual profit growth rate was not disturbed by the base. The cumulative year-on-year decline in revenue growth was also 0.5 percentage points narrower than in the fourth quarter of last year to -3.1%. The main contribution of the fee growth rate was negative to positive; in the other quarter, interest spreads were only reduced by 3 bps month-on-month due to slow relief on the debt side, while at the same time, high investment returns were achieved while the bond market was bullish. The company actively optimized resource allocation, took more measures to reduce costs and increase efficiency. PPOP changed its year-on-year growth rate from negative to positive, with a marginal increase of 11.9% to 5.4%. In terms of net profit, the company disposed of large amounts of non-performing assets during the same period last year, so credit impairment losses for the current period increased by 1.03 billion yuan compared to the same period last year. Under the influence of this high base caused by this one-time factor, the company's net profit for the first quarter increased by a negative 10.8%. In the future, on the basis of maintaining careful calculation of assets to reduce impairment losses, the company will continue to step up efforts to clear non-performing assets, strive to maintain a stable annual repayment amount, and the annual profit growth rate will not be disturbed by the base figure.
Net interest income: Q1 net interest income was -0.5% month-on-month. The annualized interest spread in a single quarter decreased by only 3 bps, mainly due to debt-side contributions. The quarterly annualized interest spread was 1.62%, down only 3 bps from month to month. Asset-side returns declined by 10bps to 3.5% in the first quarter, which is expected to be mainly affected by heavy pricing and lower LPR. The debt-side interest rate declined by 7 bps to 1.94% month-on-month. On the one hand, the share of deposits increased, and on the other hand, the decline in deposit interest rates gradually began to take effect. The decline in debt-side costs played an important role in stabilizing interest spreads.
Growth rate and structure of assets and liabilities: Credit is mainly for princesses, and the share of deposits has increased. 1) Credit: The investment scale of the Chongqing Agricultural Commercial Bank in the first quarter was 20.06 billion yuan. Last year's overall investment was relatively advanced. There was little increase in the first quarter of this year compared to the relatively high base formed in the same period last year. Among them, the investment scale for public/personal/bill loans was 156.1/38.7/790 billion yuan respectively. From a structural point of view, it was mainly public loans, accounting for 77% of the total investment scale for the entire first quarter. 2) Deposits: The Chongqing Agricultural Commercial Bank added $55.36 billion in deposits in the first quarter, similar to loans. There was a slight increase in the same period last year, but the increase was 1.7 percentage points to 71.0% compared to the fourth quarter.
Asset quality: The non-performing rate has remained stable, and provisions have been further strengthened. 1. Bad dimensions - the defect rate remains stable.
Q1 The non-performing rate of the Chongqing Agricultural Commercial Bank was 1.19%, which remained stable from month to month. The cumulative annualized net generation rate of bad sales decreased by 38 bps to 0.34%. In terms of future negative pressure, the share of concerned loans was 1.14%, the same as in half a year. 2. Provision dimension - Provision is further improved. The provision coverage rate increased 2.31 percentage points month-on-month to 367.54%; loan coverage increased by 1 bp to 4.36% month-on-month, further increasing risk offsets.
Investment suggestions: The company's 2024E, 2025E PB 0.42X/0.39X; PE 4.49X/4.28X. The company is deeply involved in Chongqing, seizing the historical opportunity of Chongqing to build 3 trillion-level industrial clusters and vigorously develop the Cheng-Chongqing Shuangcheng Economic Zone to vigorously expand infrastructure loans. At the same time, it relies on the absolute advantage of the number of outlets in Chongqing to consolidate the basic market of small and micro retail. The historical stock is poor, credit costs are low, and there is room to release profits. Historical dividends have been stable, and dividend rates are high. We maintain an “Overweight” rating and recommend active attention.
Risk warning: The economic downturn exceeded expectations, the company's operations fell short of expectations, and research information was not updated in a timely manner.