The growth rate of net interest income rebounded slightly, and the profit growth rate declined somewhat. As of 24Q1, the cumulative year-on-year growth rates of the Postbank's revenue, PPOP, and net profit to mother (same below) changed by -0.8 pct, +0.9 pct, and -2.6 pct, respectively, from the end of 2023. Among them, the growth rate of net interest income was 0.1 pct higher than at the end of 23, mainly supported by active asset investment. At the same time, the narrowing of net interest spreads was limited. The growth rate of net revenue from handling fees and commissions declined markedly, down 17.6 pct from the end of '23. This is the result of a marked decline in insurance sales revenue due to the combination of high base effects and “integration of reporting and banking”. The growth rate of other non-interest income rebounded sharply by 18.2 pct from the end of '23, mainly benefiting from changes in the fair value of transactional financial assets against the backdrop of strong performance in the bond market. The PPOP growth rate rebounded slightly from the end of '23, but the growth rate of net profit to mother declined. We estimate that 24Q1 credit costs remained the same as in 2023.
Deposits and loans are booming, and the decline in net interest spreads has narrowed. The credit growth rate of the Postbank rose quarterly in 2023, demonstrating the responsibility of service entities of major state-owned banks. Guided by the smooth credit investment policy, the year-on-year growth rate of 24Q1 loans fell 1.2pct to 11.8% month-on-month. On the debt side, against the backdrop of declining deposit growth in the entire market, as of 24Q1, the Postbank deposit growth rate rebounded 0.7 pct to 10.5%, further highlighting its ability to absorb savings. In 24Q1, the net interest spread was 9BP lower than in 2023, but it was 2BP narrower than the 23Q1 decline.
The quality of assets remains stable, and the ability to offset risks is strong. As of 24Q1, the Postbank's non-performing rate rose 1BP to 0.84% from the end of '23, and the attention rate rose by 3BP to 0.71%. Despite marginal pressure on asset quality, the indicators are still excellent. Overall, the non-performing ratio of personal loans performed well. At the end of 23, it decreased by 11 BP compared to 23H1, but the non-performing ratio for public loans increased by 25 BP, mainly due to small business loans. As of 24Q1, the provision coverage rate was 327%, down 21 pct from the end of the year 23, and the risk compensation capacity was sufficient.
According to the company's 24Q1 financial data, the year-on-year growth rate of the company's net profit for 24/25/26 is 3.9%/6.6%/10.4%, EPS is 0.84/0.90/1.00 yuan, BVPS is 8.54/9.21/9.96 yuan (the original forecast values were 8.51/9.12/9.75 yuan, respectively), and the current stock price corresponds to 0.56X/0.51X/0.48X for 24/25/26. Considering that the company's business structure is expected to benefit better from economic recovery, and that the provision coverage rate is significantly higher than that of comparable peers, compared to comparable companies, a 20% valuation premium, or 0.70 times PB in 24 years, corresponds to a reasonable value of 5.98 yuan/share, maintaining a “buy” rating.
Risk warning
Economic recovery fell short of expectations; demand for credit fell short of expectations; asset quality deteriorated.