Incident: China CITIC Bank released its 2024 semi-annual report. In 2024H1, the company achieved operating income of 109.019 billion yuan, +2.68% year on year; realized net profit to mother 35.49 billion yuan, -1.60% year over year; and average return on net assets of 10.83%, -1.49pct year on year.

Operating efficiency has remained steady, and the scale of business has grown steadily. During the reporting period, the company achieved revenue of 109.019 billion yuan, +2.68% over the same period last year. Among them, net interest income was 72.608 billion yuan, -0.82 pct year on year; accounting for 66.8%, -2.3 pct year on year. Net non-interest income was 36.032 billion yuan, +10.26% year over year; accounting for 33.2, +2.3 pct year over year, mainly investment income from bonds and notes achieved good growth. In terms of business scale, as of the end of the reporting period, the company's total loans and advances were $5.59 trillion, +1.73% compared to the end of the previous year; total customer deposits were $5.51 trillion, +2.16% compared to the end of the previous year.

The increase in public loans reached a record high, and the size of deposits continued to grow. As of the end of the reporting period, the company's general loan balance was 2.92 trillion yuan, +8.19% compared to the end of the previous year. Among them, RMB's general loan balance to the public increased by 217.818 billion yuan compared to the end of the previous year, reaching a record high for the same period. The personal loan balance was 2.33 trillion yuan, +1.96% compared to the end of the previous year. The balance of public/personal deposits was 3.86/1.57 trillion yuan, -1.28%/+6.88% at the end of the previous year; the cost ratio was 1.87%/2.29%, -22BP/-16BP year-on-year.

The quality of assets is generally stable, and the ability to offset risks continues to increase. As of 2024H1, the balance of non-performing loans was 66.58 billion yuan, +2.75% compared to the end of the previous year; the non-performing loan ratio was 1.19%, +1bp compared to the end of the previous year; with a loan ratio of 1.62%, +5pct compared to the end of the previous year, asset quality remained stable and manageable. The provision coverage rate was 206.76%, -0.83pct compared to the end of the previous year; the loan ratio was 2.46%, compared with +1bppct at the end of the previous year, and the overall risk resilience was sufficient.

Interest spreads surpassed expectations and rebounded steadily, and the balance and liability side continued to be optimized. The company's 2024H1 average daily balance net interest spread was 1.77%, +7BP at the end of the previous year. The yield on asset-side interest-bearing assets and loans was 3.83%/4.35%, compared to -12BP/-31BP at the end of the previous year, mainly affected by factors such as continued reduction in LPR interest rates, decline in mortgage interest rates, and insufficient effective credit demand; on the debt side, interest payments, and loan cost ratios 2.12%/1.98%, compared to -8BP/-16BP at the end of the previous year, the debt-side costs improved rapidly, mainly due to manual interest rate compensation management and the reduction in early listing interest rates.

Investment advice: China CITIC Bank's net revenue and profit grew steadily in the first half of 2024, and the scale of business continued to expand; the non-performing loan ratio increased slightly, but provision coverage remained at a high level, and the overall asset quality was stable. The company's 2024-2026 revenue is expected to be +3.30%/+4.86%/+5.25%, net profit to mother +1.50%/+3.45%/+3.99%, BVPS is 15.60/17.17/19.23 yuan/share, and the PB corresponding to the closing price on September 13 is 0.26/0.23/0.21 times. Give the company a “buy” rating.

Risk warning: macroeconomic fluctuations, narrowing net interest spreads, deterioration in asset quality