Key investment points: Zheshang Bank's 24Q1 revenue increased 16.65% year on year, and net profit to mother increased 5.12% year on year. The company's other non-interest income increased dramatically, leading to the highest revenue growth rate; the rate of scale expansion remained in double digits, capital pressure eased somewhat, and we maintained the company's “superior to the market” rating.

The revenue growth rate was among the highest. Zheshang Bank's 24Q1 revenue growth rate ranked second among all listed banks, mainly due to a sharp increase in investment income and other non-interest income. Net interest income achieved positive year-on-year growth with volume compensation.

Maintain a double-digit rate of scale expansion. Zheshang Bank's total assets in 24Q1 increased 15.1% year-on-year compared to 23Q1, loans increased 11.1% year-on-year compared to 23Q1, and deposits increased 10.7% year-on-year compared to 23Q1.

Increase capital adequacy ratio to ease capital pressure. After the implementation of the new capital regulations, Zheshang Bank's 24Q1 core tier 1 capital adequacy ratio increased by 38 bps to 8.60% compared to the end of 23, and the capital adequacy ratio increased by 35 bps to 12.54% from the end of 23.

Investment advice. We forecast EPS of 0.55, 0.60, 0.64 yuan in 2024-2026, and net profit growth rates of 7.08%, 7.52%, and 6.66%. We obtained a reasonable value of 3.58 yuan based on the DDM model; according to the PB-ROE model, the 2024E PB valuation was 0.60 times (0.52 times that of a comparable company), and the corresponding reasonable value was 3.76 yuan. Therefore, a reasonable value range of 3.58-3.76 yuan (corresponding to 2024 PE is 6.49-6.81 times, corresponding PE is 5.22 times that of the same company), maintaining the “superior to market” rating.

Risk warning: The solvency of enterprises has declined, asset quality has deteriorated dramatically; financial supervision policies have undergone major changes.