Revenue and profit turned positive year-on-year, and performance continued to pick up. The company achieved revenue of 478.348 billion yuan (YoY, +1.64%) in the first three quarters of 2024, up 2.31 pcts from the first half of the year; realized net profit to mother of 175.763 billion yuan (YoY, +0.52%), and the growth rate rebounded 1.76 pct from the first half of the year. Among them, the third quarter achieved revenue of 161.272 billion yuan (YoY, +6.51%) and net profit to mother of 57.162 billion yuan (YoY, +4.38%) in a single quarter. The company's annualized weighted average ROE for the first three quarters was 9.55%, down 0.82 pct year on year, slightly down 0.03 pct from the first half of the year, and profitability was relatively stable.

The size of assets has grown steadily. By the end of September, the company's total assets increased 7.25% year on year to 34.07 trillion yuan, of which loans (including accrued interest) increased 8.55% year over year to 21.44 trillion yuan. The company added a total of about 1.47 trillion yuan in credit investment (including accrued interest) in the first three quarters. Structurally, it was mainly driven by the public, of which 293.1 billion yuan was added in a single quarter. By the end of September, corporate loans and deposits (all including accrued interest) had increased by 7.38% and 3.51% respectively from the beginning of the year, and the core Tier 1 capital adequacy ratio had rebounded 0.20pct to 12.23% from the end of June.

Net interest spreads narrowed slightly, and net interest income declined year over year. The average daily net interest spread disclosed by the company for the first three quarters was 1.41%, down 23 bps from the previous year, slightly narrowing by 3 bps from the first half of the year. It was mainly affected by the decline in asset-side returns. At the same time, the US dollar's entry into the interest rate cut cycle also weakened the contribution of foreign currencies to the Group's net interest spread. Affected by factors such as the narrowing of net interest spreads, the company's net interest income fell 4.81% year-on-year to 335.997 billion yuan in the first three quarters, down 1.72 pct from the growth rate in the first half of the year.

Non-interest income increased, and other non-interest income performed well. The company's non-interest revenue in the first three quarters increased 20.99% year-on-year to 142.351 billion yuan, a sharp increase of 15 pcts over the first half of the year. The growth rate in the third quarter was relatively fast. Among them, net revenue from handling fees and commissions decreased by 3.93% year on year to 60.693 billion yuan; total other non-interest income increased by 49.88% year on year to 81.658 billion yuan, benefiting from high investment returns and impressive performance.

Defects have risen slightly, and reserves have declined slightly. The company's non-performing loan ratio at the end of the third quarter was 1.26%, up 0.02 pct from the end of the second quarter, down 0.01 pct from the beginning of the year; the provision coverage rate at the end of the third quarter was 198.86%, down 2.83 pcts from the end of the second quarter, up 7.20 pcts from the beginning of the year. Overall, the quality of the company's assets remains stable.

Investment advice: The overall fundamental performance of the company is relatively stable. Considering that non-interest revenue growth is slightly better than previous expectations, we slightly raised the company's profit forecast. The company's net profit for 2024-2026 is 233.7/237.5/247.4 billion yuan, which corresponds to a year-on-year growth rate of 0.8%/1.6%/4.2%; diluted EPS is 0.75/0.76/0.79 yuan; PE corresponding to the current stock price is 5.9/5.8/5.6x, and PB is 0.55/0.51/0.48x. Maintain an “better than the market” rating.

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