扩表放缓稳息差。1H24 公司净息差为1.29%，同比下降2bp，公司披露2Q24 单季净息差为1.30%，环比1Q24 提升3bp，较好的息差表现主要源于负债成本改善。1H24 公司负债成本同比下降9bp，主要受存款挂牌利率下调及手工补息清理等影响。二季度公司扩表速度有所放缓，总资产/贷款同比分别+2.6%/+6.1%，增速较一季度分别下降1.6ppt/0.7ppt，更加注重规模和息差的平衡。尽管规模增速明显放缓，但得益于息差表现改善，公司1H24 净利息收入同比增长2.2%，增速与一季度持平。1H24 results are basically in line with our expectations
The company's 1H24 net profit/operating revenue/profit before provision was -1.6%/-3.5%/-6.3% year-on-year, which is basically in line with our expectations.
Development trends
Table expansion is slowing down interest spreads. 1H24's net interest spread was 1.29%, down 2 bps year on year. The company disclosed that 2Q24's net interest spread for the single quarter was 1.30%, an increase of 3 bps over 1Q24. The better interest spread performance was mainly due to improved debt costs. The debt cost of 1H24 companies decreased by 9 bps year-on-year, mainly due to lower interest rate listings on deposits and the clean-up of manual interest payments. The company's inventory expansion rate slowed in the second quarter. Total assets/loans were +2.6%/+6.1% year-on-year, respectively. The growth rate decreased by 1.6pp/0.7ppt from the first quarter, and more attention was paid to the balance of scale and interest spreads. Despite a marked slowdown in scale growth, thanks to improved interest spread performance, the company's 1H24 net interest income increased 2.2% year over year, the same growth rate as in the first quarter.
Optimization of the credit structure. Although the overall loan growth rate is not high, the company focuses on preparing “five major articles”, continuously optimizing the credit structure, and further increasing support for the country's major strategies, key areas, and weak links. 1H24's loan balance for technology-based enterprises increased 13.9% from the beginning of the year, the loan balance for inclusive small and micro enterprises increased 15.7% from the beginning of the year, and the green loan balance increased 6.0% from the beginning of the year. The growth rate was faster than the average increase in overall loans.
The decline in non-interest income increased. 1H24's non-interest revenue fell 12.2% year on year, and the decline was 8.6ppt from the first quarter. Among them, net handling fee revenue decreased 14.6% year over year, the decline was 8.2ppt from the first quarter, and other non-interest income fell 10.2% year on year, and the decline was 9.3ppt from the first quarter. The pressure on intermediary business was mainly affected by factors such as capital market fluctuations, weak consumer consumption, fee reduction concessions, and rate adjustments for related products. Revenue from agency, investment banking and bank card businesses declined by 39.5%/22.5%/19.8%, respectively.
Profit forecasting and valuation
Keep profit forecasts unchanged. The current A share price corresponds to 2024/2025 0.6x/0.6x P/B, and the H share price corresponds to 2024/2025 0.4x/0.4x P/B. Considering the industry valuation correction, we raised our target price for A shares by 20% to $9.55, corresponding to 0.7x/0.7x P/B in 2024/2025, with 20.3% upside compared to the current stock price to maintain the outperforming industry rating; raised the target price of H shares by 20% to HK$7.36, corresponding to 0.5x/0.5x P/B in 2024/2025, with 19.1% upside compared to the current stock price, maintaining the outperforming industry rating.
risks
Economic recovery falls short of expectations, and real estate and local financing platforms are at risk.
