规模扩张速度有所放缓。1H24 末，公司总资产、贷款、存款分别同比增长16.7%、22.7%、14.6%，较1Q24 末的19.6%、26.9%、16.8%有所放缓，或由于地方政府投资相关信贷项目减少。但从结构来看，对公政信类业务仍是主要的新增信贷增长来源，1H24 对公、零售分别占贷款增量82%、18%，对公贷款中租赁和商务服务业同比增长56.8%，零售贷款中住房按揭、消费贷、个经贷款分别同比增长3.3%、100.8%、48.5%。1H24 results are basically in line with our expectations
Bank of Chengdu announced 1H24 results: 1H24 revenue and net profit to mother increased 4.3% and 10.6% year-on-year respectively; 2Q24 single-quarter revenue and net profit to mother increased 2.5% and 8.8% year-on-year respectively. The results were basically in line with our expectations.
Development trends
The pace of scale expansion has slowed somewhat. At the end of 1H24, the company's total assets, loans and deposits increased by 16.7%, 22.7%, and 14.6%, respectively. This is a decrease from 19.6%, 26.9%, and 16.8% at the end of 1Q24, or due to a decrease in credit projects related to local government investment. However, from a structural point of view, the public administration and credit business is still the main source of new credit growth. 1H24 accounts for 82% and 18% of loan growth for public loans, leasing and business services increased 56.8% year-on-year in public loans, and housing mortgages, consumer loans, and personal finance loans increased 3.3%, 100.8%, and 48.5% year-on-year respectively in retail loans.
The 2Q24 net interest spread fell 13 bps quarter-on-quarter to 1.57%. The company's average daily net interest spread for 1H24 was 1.66%, down 26 bps year on year. We estimate that 2Q24's net interest spread, return on interest-bearing assets, and interest-paying debt cost ratio were 1.57%, 3.74%, and 2.22%, respectively, down 13 bps, 19 bps, and 7 bps from quarter to quarter. Asset-side returns were under strong downward pressure, and net interest income fell 3.8% year on year in 2Q24.
2Q24's non-interest revenue increased 26.8% year over year, with handling fee revenue and other non-interest income increasing by 43.1% and 23.4%, respectively. Among handling fee income, financial management and asset management business revenue 1H24 increased 58.6% year over year, while investment income from other non-interest income 1H24 increased 38.4% year over year. 2Q24 net handling fee revenue and other non-interest income accounted for 4.9% and 20.3% of revenue, respectively.
The rate of bad generation has increased but is still at a low level. At the end of 2Q24, the Bank of Chengdu's non-performing rate and attention rate were 0.66% and 0.44%, respectively. The non-performing rate remained flat, and the attention rate increased by 3 bps; provision coverage at the end of 2Q24 was 496.0%, down 7.8% from the previous month; the proportion of overdue loans at the end of 1H24 and loans overdue for 90 days or more was 0.90% and 0.52%, respectively, up 10 bps and 5 bps from the end of the previous year, respectively. We estimate that the company's write-off efforts have increased. The 1H24 defect generation rate was 0.31%, an increase of 15 bps over the previous year.
High return on net assets and dividend ratios bring investment value. The 1H24 annualized ROAE is 18.04%, and the 2024E dividend rate is 6.7%, which is still at a high level, bringing investment value. In addition, we are also concerned about its convertible debt-to-equity conversion process. At the end of 2Q24, the company's core Tier 1 capital adequacy ratio was 8.17%, down 28 bps from month to month.
The company issued 8 billion yuan of convertible bonds in 2022. We estimate that if the remaining converted bonds were converted to shares, the 2024E dividend ratio would be reduced by 10.0% to 6.0% per share, and the 2024E dividend ratio would drop from 6.7% to 6.0%, while also having a positive impact of 62 bps on the core Tier 1 capital adequacy ratio. Currently, there is room for a 6.3% increase in the stock price compared to the mandatory redemption price.
Profit forecasting and valuation
Keep profit forecasts unchanged. The current stock price corresponds to 0.8 times the 2024E net market ratio and 0.7 times the 2025E net market ratio. Maintaining an outperforming industry rating, considering that Bank of Chengdu's dividend ratio is still at a high level compared to its peers, we raised our target price by 17.6% to 17.09 yuan, which corresponds to 0.9 times the 2024E net market ratio and 0.8 times the 2025E net market ratio. There is 14.2% upside compared to the current stock price.
risks
Regional economic performance fell short of expectations, and the decline in net interest spreads exceeded expectations.
