Strong growth in net interest income led to an accelerated increase in revenue. 24H1's net interest income increased 14.75% year over year compared to 23H1, and Gein achieved steady scale growth based on rapid 24Q1 table expansion. The average daily size of 24H1 loans and advances increased by 22.62% year on year. Among them, the average daily size of public loans increased 20.68% year on year, and the average daily size of personal loans increased 25.93% year on year.

The interest-bearing debt cost ratio or inflection point. The average cost ratio of 24H1's interest-bearing debt was 2.12%, down 3 bps from '23, partially hedging the impact of declining asset-side interest rates. The average cost rate for deposits was 1.96%, down 5 bps from '23. The company accelerated the upgrading and iteration of digital systems and business products, and promoted steady growth in public deposits. 24H1 unit time deposits contributed more incremental growth (+169.1 billion yuan).

The share of non-performing loans and overdue loans remained stable. The company's defect rate at the end of 24Q2 was the same as that of 24Q1, at 0.76% month-on-month.

The share of overdue loans decreased slightly by 1 bps to 0.92% at the end of 23, and the share of newly generated overdue loans (overdue within 3 months) decreased by 3 bps to 0.34% compared to 23 years. The company disclosed the non-performing ratio of personal loans. Among them, the non-performing ratio for personal operating loans reached 3.05%, but this account for only 7% of the total loan amount, and there was almost no increase in 24H1.

Investment advice. We forecast EPS for 2024-2026 to be 4.07, 4.41, 4.75 yuan, and net profit growth rates of 8.21%, 8.07%, and 7.68%. We obtained a reasonable value of 27.38 yuan based on the DDM model (see Table 2); according to the comparable valuation method, the 2024E PB valuation was 0.80 times (0.56 times the comparable company), and the corresponding reasonable value was 26.33 yuan. Therefore, the reasonable value range is 26.33-27.38 yuan (corresponding to 2024 PE is 6.47-6.73 times, corresponding PE is 4.22 times that of the same company), maintaining the “superior to the market” rating.

Risk warning: The solvency of enterprises has declined, asset quality has deteriorated dramatically; financial supervision policies have undergone major changes.