The rate of table expansion has further slowed down, and the asset structure has been optimized and adjusted. CCB loans maintained a year-on-year growth rate of more than 10%, while interbank assets declined 25% year over year, and the asset allocation structure was optimized. Loans for technology-based enterprises increased by 12.31% compared to the end of 2023, and loans for strategic emerging industries increased by 21.19% compared to the end of 2023.

Appropriate cost control. The 24Q2 cost-to-revenue ratio was 24.04%, which continues to be good. Employee costs declined slightly year on year, and care for grassroots employees continued to be increased structurally; other business and management expenses fell 7.22% year over year, and the company reduced general expenses while actively supporting strategy promotion and customer account expansion.

The non-performing generation situation was stable year on year. The share of concerned loans declined, and the share of bad loans for public real estate both declined. At the end of 24Q2, CCB's defect rate decreased by 1bp to 1.35% compared to 24Q1, and the provision coverage rate increased by 0.58pct to 238.75% compared to 24Q1. The share of concerned loans decreased by 37 bps to 2.07% compared to the end of 2023, and the share of overdue loans increased 16 bps to 1.27% compared to the end of 2023. The non-performing rate of the company's real estate loans to the public at the end of 24Q2 decreased by 44 bps to 5.20% compared to the end of 2023, and the non-performing balance decreased by 0.771 billion yuan compared to the end of 2023.

Investment advice. We forecast EPS of 1.32, 1.39, and 1.45 yuan in 2024-2026, and net profit growth rates of 0.75%, 5.25%, and 3.97%. We obtained a reasonable value of 7.21 yuan based on the DDM model; according to the PB-ROE model, the 2024E PB valuation was 0.65 times (0.57 times that of a comparable company), and the corresponding reasonable value was 8.27 yuan. Therefore, the reasonable value range was 7.21-8.27 yuan (5.46-6.26 times PE for 2024, 5.89 times PE for same industry companies), 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.