The revenue structure was optimized, and the net interest revenue growth rate continued to increase month-on-month. As of 24Q3, the cumulative year-on-year growth rates of the Bank of Hangzhou's revenue, PPOP, and net profit to mother (same below) decreased by 1.5pct, 2.0pct, and 1.4pct to 3.9%, 3.4%, and 18.6%, respectively, compared to 24H1. Despite a slight slowdown in performance growth, the revenue structure improved. The 24Q3 net interest income growth rate continued to increase 3.4 pcts month-on-month compared to 24H1, or benefited from high asset investment and marginal stabilization of interest spreads; under the low base effect, negative net fee revenue growth continued to narrow by 1.8 pcts month-on-month; the slowdown in revenue growth was mainly dragged down by net other non-interest income. The latter growth rate fell 18.7 pct month-on-month. First, the bond market was adjusted in the third quarter.

There is strong momentum for table expansion, and the scale of capital has maintained a relatively rapid growth rate. On the asset side, as of 24Q3, the Bank of Hangzhou's total assets and loan growth rate decreased by 1.1 pct and 0.6 pct to 12.7% and 15.9%, respectively, compared to 24H1. Among them, public and personal loans increased 17.9% and 12.0% year on year respectively. Supported by broad regional infrastructure demand, loan growth was still mainly contributed to the public side. On the debt side, the year-on-year growth rate of total debt and deposits decreased by 1.1 pct and increased by 2.6 pct to 12.1% and 16.3%, respectively, and the share of term deposits in loans increased by 3.5 pct month-on-month. Against the backdrop of multiple cuts in deposit listing interest rates, it is expected that there is considerable room for optimization of debt costs.

Asset quality remains excellent, and provision is sufficient to feed back profit margins. As of 24Q3, the Bank of Hangzhou's non-performing ratio was 0.76%, flat at 24H1. The interest rate and overdue rate were 7bp up 7bp and down 4bp to 0.59% and 0.67%, respectively. Asset quality remained excellent. At the same time, loans/non-performing loans overdue for 90 days or more decreased by 11.2 pct to 58.4% compared to 24H1, reflecting its strict determination of bad conduct. As of 24Q3, provision coverage was down 1.9 pct month-on-month to 543.3%, and the loan ratio was as high as 4.12%, with sufficient provision to feed back profit.

The year-on-year growth rate of the company's net profit for 24/25/26 is 19.9%/17.2%/13.5%, EPS is 2.76/3.25/3.71 yuan, BVPS is 17.83/20.55/23.61 yuan (original forecast value 18.02/20.78/23.88 yuan), and the current stock price corresponds to the 24/25/26 PB of 0.81X/0.71X. Considering the company's high profit level, compared to comparable companies, it maintained a 20% valuation premium, and was given 0.92 times PB over 24 years, corresponding to a reasonable value of 16.49 yuan/share, maintaining a “buy” rating.

Risk warning

Economic recovery fell short of expectations; demand for credit fell short of expectations; asset quality deteriorated.