Introduction to this report:
The performance of the 2024 quarterly report of the Postbank was in line with expectations. The performance was stable, the credit maintained double-digit growth, the debt base was consolidated, and the holding increase rating was maintained.
Summary:
Investment advice: Maintain Postbank's 2024-2026 net profit growth forecast of 0.13%/2.89%/5.80%, corresponding to EPS of 0.82/0.84/0.89 yuan. Maintain the target price of HK$5.0, corresponding to 0.55 times PB in 2024, and maintain an increase in holdings rating.
Revenue was more resilient, and profits declined slightly. 2024Q1 revenue increased 1.4% year over year, and the Postbank was the only state-owned bank to achieve positive revenue growth. The Q1 net interest spread (estimate) for a single quarter narrowed by 10 bps year on year, but credit maintained a high growth rate. Net interest income increased 3.1% year on year under quantitative compensation, and other non-interest net income increased 16.7% year on year, which together boosted revenue performance. Affected by the “integration of reporting and banking” policy, agency insurance business revenue declined, leading to an 18.2% year-on-year decrease in net revenue from handling fees and commissions, which dragged down revenue growth. Operating and management expenses increased 7.61% year over year, leading to negative profit growth.
The rate of table expansion is unabated, and the growth rate of public credit is relatively fast. Q1 loans increased 11.8% year on year. Among them, loans to public loans increased 18.1% year on year, the size of notes decreased, and retail loans increased 10.5% year over year. Mainly, the Postbank increased credit support in key areas of rural revitalization. Personal microfinance is growing faster, and retail credit investment is stronger than comparable peers. In terms of debt, Q1 deposits increased by more than 10% year-on-year, mainly due to retail deposits. The share of deposits in debt increased to 95.5%, further consolidating the debt base; deposit interest rates fell 5 bp to 1.48% compared to the end of 2023, consolidating the debt cost advantage.
Asset quality fluctuated slightly. Compared to the end of 2023, the defect rate increased by 1 bps to 0.84% at the end of Q1, and the provision coverage rate decreased by 20.7 percentage points to 326.9%; in terms of forward-looking indicators, the attention rate increased by 3 bps to 0.71%, and the overdue rate increased by 8 bps to 0.99%. Q1 New non-performing loans of 17.093 billion yuan were generated, and the annualized non-performing loan generation rate was 0.81%. Asset quality indicators fluctuate slightly, but the overall level of asset quality is still at the top of comparable peers.
Risk warning: demand recovery fell short of expectations; retail loan risk exposure exceeded expectations; competition for small and micro loans intensified.