The growth rate of net profit to mother in a single quarter was positive in the third quarter. In the first three quarters of 2024, revenue was 252.7 billion yuan, down 2.9% year on year, and net profit to mother was 113.2 billion yuan, down 0.6% year on year. Among them, single-quarter revenue for the third quarter decreased 2.5% year over year, and net profit to mother increased 0.8% year over year. The company's annualized ROAA and ROAE were 1.33% and 15.38%, respectively, down 0.13 and 2.00 percentage points year-on-year, respectively.

Net interest spreads fell by only 1 bps compared to the first half of the year, and credit investment is still weak. Net interest income fell 3.1% year on year in the first three quarters, which was 1.1 percentage points narrower than the decline in the first half of the year, mainly benefiting from the narrowing of net interest spreads.

The company disclosed a net interest spread of 1.99% for the first three quarters, down 20 bps year on year, down 1 bps from the first half of the year. Among them, the net interest spread for the third quarter was 1.97%, down 2 bps from the second quarter and lower than the 3 bps drop in the second quarter. Among them, the decline in loan yield continued to slow. The loan yield in the third quarter was 3.91%, down 5 bps from the second quarter, and lower than the 9 bps decline in a single quarter in the second quarter. The deposit cost ratio continued to decline. The deposit cost rate for a single quarter in the third quarter was 1.58%, down 4 bps from the second quarter.

At the end of the period, the company's total assets were 11.65 trillion yuan, total loans were 6.5 trillion yuan, and total deposits were 8.73 trillion yuan, up 5.7%, 3.8% and 7.1% respectively from the beginning of the year. Credit investment remains weak, in line with industry trends.

Fee revenue is still under pressure, and investment returns have maintained a good growth rate. Non-interest income fell 2.6% year on year in the first half of the year. Among them, net income from handling fees decreased by 16.9%, and other non-interest income increased by 28.2% year on year, mainly due to an increase in income from bond and fund investments. Among fee income, wealth management fees and commission income decreased by 27.6% year on year, and asset management fees and commission income decreased by 1.2% year on year. Recently, however, policies have continued to gain strength, and capital market activity has continued to increase, and we judge that the wealth management business is also expected to reverse its difficult situation. As a leader in the big wealth management business, the company will also fully benefit.

Asset quality is stable and credit costs are stable. The non-performing ratio at the end of the period was 0.94%, the same as at the end of June. The disclosed annualized non-performing loan generation rate (company caliber) was 1.02%, down 1 bp from the previous year. Among them, the generation of non-performing loans mainly came from retail loans, and the amount of non-performing loans generated on public loans had declined year-on-year. The attention rate at the end of the period was 1.30%, up 6 bps from the end of June; the overdue rate was 1.36%, down 6 bps from the end of June. Overall, the quality of the company's assets is stable. Credit impairment losses in the first half of the year decreased by 8.5% year on year, and the end-of-period provision coverage rate was 432%, down 2 percentage points from the end of June.

Investment advice: The company's big retail business advantage is ahead of peers, and wait for the big retail business to pick up. We maintained 2024-2026 net profit of 147.3/153.5/165.1 billion yuan, corresponding to a year-on-year growth rate of 0.5%/4.2%/7.6%. The current stock price corresponds to the 2024-2026 PE value of 6.7x/6.5x/6.0x, and the PB value is 0.94x/0.85x/0.78x, maintaining the “superior to market” rating.

Risk warning: Macroeconomic recovery falls short of expectations and will drag down the company's net interest spreads and asset quality.