Key elements of the report

Rui Fung Bank released its 2024 semi-annual results report.

Investment highlights:

2024.1H revenue grew 14.86% year on year: Rui Fung Bank's 2024.1H revenue grew 14.86% year on year, and net profit to mother grew 15.37% year on year. Among them, net investment income achieved significant growth, supporting a high increase in revenue, and cost-side provision increases remained high.

Total assets grew 10.8% year on year, loans grew 8.6% year on year: As of the end of June 2024, Rui Fung Bank's total assets increased 10.8% year on year. Among them, loans increased 8.6% year on year, and financial investment grew 26.7% year on year. Risk-weighted assets grew 11.4% year over year. The core Tier 1 capital adequacy ratio was 13.03%, up 35 BP from the beginning of the year.

The retail loan non-performing ratio has increased: As of the end of June 2024, Rui Fung Bank's non-performing ratio was 0.97%, which was the same as at the end of March. Among them, the retail loan non-performing rate was 1.77%, up 28 BP from the beginning of the year. The attention rate was 1.56%, up 19BP from the end of March, and the provision coverage rate was 323.79%, up about 19 percentage points from the end of March. As a forward-looking indicator, the net bad generation rate increased by 13 BP from the beginning of the year.

Net interest spread decreased by 19BP from the beginning of the year: 2024.1H net interest spread, loan yield, and deposit cost ratio decreased by 19, 39, and 4 BP, respectively, from the beginning of the year. Among them, corporate loans fell 31 BP from the beginning of the year, and retail loans fell 50 BP from the beginning of the year.

Profit prediction and investment advice: Rui Fung Bank adheres to the position of “supporting agriculture with small support and serving the community” and continuously expands the scope of services through various methods such as business innovation, model innovation, digitalization, and equity participation, so that the scale has maintained relatively rapid growth. Considering factors such as weak overall credit demand and the pricing environment, we adjusted the profit forecast for 2024-2025 based on the latest financial data. Net profit to mother was 1.912 billion yuan and 2.152 billion yuan respectively (2.02 billion yuan/2.343 billion yuan before adjustment), corresponding year-on-year growth rates were 10.73% and 12.53%, respectively.

According to the closing price of Ruifeng Bank A shares of 4.84 yuan on August 27, the corresponding 2024-2026 PB valuation was 0.53 times, 0.48 times, and 0.43 times, respectively, maintaining an increase rating.

Risk factors: The banking industry as a whole is greatly affected by macroeconomic, monetary and regulatory policies. Changes in the economy and related policies will have an important impact on bank operations.

This includes changes in net interest spreads, asset quality expectations, etc.