The growth rate of net profit to mother increased compared to Q1. 24H1 revenue was -3.09% year-on-year, and net profit to mother was -1.33% year-on-year, up from the Q1 growth rate. Among them, Q2 revenue growth rate in a single quarter was -1.48%, and net profit growth rate to mother was -0.67%. The 24Q2 core tier 1 capital adequacy ratio was 13.86%, up 0.77pct year on year.

The scale of credit in key areas continues to expand. The company actively implements national strategic directions such as the “Five Major Articles”, increases loan investment in key areas, and continuously improves the quality and efficiency of serving the real economy. Compared with the end of '23, the green credit balance was 492.4 billion yuan, an increase of 9.96%; the manufacturing loan balance was 579.5 billion yuan, an increase of 4.40%; and the loan balance for inclusive small and micro enterprises was 856.5 billion yuan, an increase of 6.50%.

The overall quality of assets is stable. In 24Q2, the company's defect rate increased by 2 bps month-on-month to 0.94%. Compared with the end of '23, the non-performing ratio for public loans decreased by 6 bps to 1.13%, and the non-performing ratio for personal loans increased slightly by 1 bps to 0.90%.

The company continues to promote risk mitigation and disposal in real estate companies. The non-performing rate in the real estate industry fell 14 bps from the end of 23, and the overall asset quality was stable.

Investment advice. We forecast EPS of 5.8, 6.16, and 6.47 yuan in 2024-2026, with net profit growth rates of 2.03%, 6.17%, and 4.98%. We obtained a reasonable value of 34.59 yuan based on the DDM model; according to the PB-ROE model, the 2024E PB valuation was 0.90 times (0.41 times that of a comparable company), and the corresponding reasonable value was 36.15 yuan. Therefore, the reasonable value range is 34.59-36.15 yuan (corresponding to 2024 PE is 5.96-6.23 times, corresponding PE is 4.73 times for same company), 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.