Summary of the three-quarter report: The non-interest slowdown dragged down a slight decline in revenue and net profit growth. The net interest income of the Chongqing Agricultural Commercial Bank continued to grow steadily in the third quarter of 2024, driven by increased year-on-year investment in new credit and a narrowing in interest spreads. However, due to bond market adjustments, the overall negative year-on-year increase in revenue increased 0.5 percentage points to -1.9% from the second quarter; the overall asset quality of the company remained steady, and the cumulative year-on-year growth rate of the company's net profit fell 1.8 percentage points to 3.5% year-on-year.

Net interest income: Q3 net interest income continued to grow 1% month-on-month, up 0.24 percentage points from the second quarter, mainly driven by a year-on-year increase in the volume of new credit investment. In terms of price, interest spreads in the third quarter fell 2 bps to 1.57% month-on-month, and the decline was slightly less than in the second quarter. Among them, the asset-side yield fell 11 bps to 3.26% month-on-month, with a large decline. The debt-side interest rate declined 7 bps to 1.78% month-on-month, which mitigated the decline in interest spreads. In terms of scale, new credit investment in the third quarter increased more than in the same period last year, and its contribution to net interest income increased.

Growth rate and structure of assets and liabilities: New credit was invested more year-on-year, and the share of loans increased. 1) Loans: In terms of total investment volume, the Chongqing Agricultural Commercial Bank invested 8.51 billion yuan in a single quarter, an increase of 2.99 billion yuan over the same period last year, an increase of 54.2%. The share of interest-bearing assets rose to 46.9%, an increase of 0.3 percentage points over the previous year. In terms of investment structure, the third quarter was still dominated by public loans, and the scale of personal loans recovered and increased. In the third quarter, 7.86/0.65 billion yuan was invested in public (including notes) and personal loans, respectively, and the share of interest-bearing assets changed by +0.4%/-0.1 percentage points to 27.7%/19.2%. 2) Deposits: Deposits of the Chongqing Agricultural Commercial Bank fell 1.76 billion in the third quarter. The decline was narrower than in the second quarter. The share of interest-bearing debt fell 0.3 percentage points to 69.1%.

Asset quality: Overall, it remains stable. 1. Defect dimensions - the defect rate is steadily declining. In 3Q24, the non-performing rate of Chongqing Agricultural Commercial Bank was 1.17%, down 2 bps from month to month. The cumulative annualized net generation rate of defects was 0.86%, which remained stable. 2. Provisioning dimension -- Provisioning declined slightly. The provision coverage rate fell 1.68 percentage points month-on-month to 358.59%; loan coverage fell 8 bps month-on-month to 4.2%.

Investment suggestions: The company 2024E, 2025E, 2026E PB 0.53X/0.46X; PE5.73X/5.46X/5.22X. The company is deeply involved in Chongqing, seizing the historical opportunity of Chongqing to build 3 trillion industrial clusters and vigorously develop the Cheng-Chongqing Shuangcheng Economic Zone to vigorously expand infrastructure loans, and at the same time rely on the absolute advantage of the number of outlets in Chongqing to consolidate the basic market of small and micro retail. The historical stock is poor, credit costs are low, and there is room to release profits. Historical dividends have been stable, and dividend rates are high. We maintain a “buy” rating and recommend active attention.

Risk warning: The economic downturn exceeded expectations, the company's operations fell short of expectations, and research information was not updated in a timely manner.