Financial report summary: 1. Performance growth rate improved: 1Q24 revenue +2.7% YoY (vs 2023 YoY +1.2%), 1Q24 net profit +5.1% YoY (vs 2023 +0.5% YoY), both revenue and net profit growth rates increased marginally. 2. Net interest income for a single quarter was +18.2% month-on-month, and the annualized net interest spread for a single quarter was +17bps to 1.4% month-on-month, and both sides of the capital contributed. (1) Asset side: Yield increased 11 bps to 4.15% month-on-month, good credit investment, and financial consumer subsidiaries maintained a relatively rapid growth rate, as well as low month-on-month base factors; (2) Debt side:
Interest payment rates declined by 5 bps to 2.47% month-on-month. The Bank of Nanjing actively increased its share of low-cost bonds in Q1, which also supported interest spreads. 3. Assets and liabilities: (1) Asset side: Good start in 1Q24, with good public support. Bank of China Southern France and Pakistan's consumer funds maintained rapid growth, driving positive growth in individual loans. 1Q24 interest-bearing assets +11.5%; total loans +14.6%. The investment scale of 1Q24 in a single quarter was 74.7 billion yuan, which was basically stable over the previous year. Public (including notes) and personal loans increased by 74.3 billion yuan and 350 million yuan respectively. In retail, the 1Q24 Bank of China FABA consumer finance scale increased by 3.81 billion yuan compared to the beginning of the year, driving a positive increase in individual loans (in 2023, the net annual increase of 27.53 billion yuan, accounting for 112% of the bank's net increase in consumer loans). (2) Debt side: There was a year-on-year increase in bond issuance, weak deposits, or the impact of active adjustment factors. 1Q24 interest-bearing debt increased 10.7% year on year, deposits increased 2.9% year on year, and the share of low-cost bonds increased, leading to a decline in interest payment rates. In 2023, corporate activity achieved a positive year-on-year increase, leading to a slight increase in the share of current deposits. 4. Net non-interest income: 1Q24 net non-interest income was +17.6% YoY (+11.8% YoY), continuing the trend of marginal growth recovery since 1H23, mainly due to high processing fees. Net processing fees for 1Q24 were +28.7% YoY (-32.1% YoY in 2023), which changed from negative to positive and achieved a high increase. There are reasons for the low base; net other non-interest income: 1Q24 increased 14.8% year over year (+31.1% YoY in 2023), and the growth rate declined marginally. 5. Asset quality:
The 1Q24 non-performing rate fell 6 bps to 0.83% month-on-month, and the share of concerned loans fell 12 bps to 1.04% month-on-month; provision coverage fell 3.63 percentage points month-on-month to 356.95%, and the margin of safety remained high. 6. Others: The dividend rate remained at 30%, and the capital adequacy ratio increased. The dividend rate remained at 30%, and the estimated static dividend rate was 5.52%; the 1Q24 core Tier 1 capital adequacy ratio, Tier 1 capital adequacy ratio, and capital adequacy ratio were 9.22%, 11.11%, and 13.18%, respectively, with month-on-month changes of +17, +29, and +35 bps.
Investment advice: The company seeks steady progress and continues to recommend. Company 2024E, 2025E, 2026E PB0.65X/0.59/X0.54X; PE 5.23X/4.87X/4.54X. The company's fundamentals are steady, performance is picking up, management is excellent, and the regional economy is well developed. Continued steady development can be expected in the future, and is expected to maintain high dividends.
Covered for the first time, an increase in holdings rating is given.
Risk warning: The economic downturn exceeded expectations, and the company's operations fell short of expectations.