净非息收入同比+16.9%，其他非息增速边际向上。净非息收入同比增16.9%（1H24同比+19.5%）。净手续费收入方面，同比-11.9%（vs 1H24 同比11.3%），同比增速转负，拆分来看，手续费收入同比-1.3%，手续费支出同比增加56.3%，预计与手续费支出节奏有关。净其他非息收入方面，同比+26.2%（1H24 同比+22%），增速边际向上。The revenue growth rate narrowed slightly, and the net profit growth rate remained stable. 3Q24 revenue +6.1% YoY (vs 1H24 +7.1% YoY), 1H24 net profit +10.1% YoY (vs 1H24 +10.1% YoY).
Net interest income was -0.1 points month-on-month, and the debt side supported interest spreads. It is estimated that the annualized net interest spread for a single quarter fell 8 bps to 1.71% month-on-month, the yield on interest-bearing assets fell 23 bps to 3.94% month-on-month, and the interest-bearing debt cost ratio decreased by 10 bps to 2.17% month-on-month.
Asset and liability growth rate and structure: Continued strength in public relations, and retail investment picked up in the second half of the year. (1) Asset side: The share of 3Q24 loans, bond investments, and interbank assets changed by -0.1, +0.6, and +0.1 points month-on-month, and the structure remained stable. The balance of retail loans has not surfaced since the beginning of the year, but retail loans achieved a net increase of 12.8 billion in a single quarter in the third quarter, showing a recovery in investment in the second half of the year. (2) Debt side: In 3Q24, the share of deposits, debt issuances, and interbank debt changed by -1.8, +3, and -1.2 points, respectively. The share of deposits declined, and the share of bonds issued increased.
Net non-interest income was +16.9% year-on-year, and other non-interest growth rates increased marginally. Net non-interest income increased 16.9% year over year (1H24 +19.5% year over year). In terms of net handling fee revenue, -11.9% YoY (vs 1H24, 11.3% YoY), the year-on-year growth rate turned negative. Looking at the split, fee revenue was -1.3% YoY, and handling fee expenses increased 56.3% year-on-year, which is expected to be related to the pace of handling fee expenses. In terms of net other non-interest income, the year-on-year increase was +26.2% (1H24 +22% YoY), and the growth rate increased marginally.
The quality of assets remains stable, and the margin of safety is high. The defect rate continued to be flat at 0.89% month-on-month, maintaining the best level since 2012. The net annualized negative generation was 1.21%, a decrease of 8 bps over the previous month. The provision coverage rate fell 6.16 points month-on-month to 351.03%; the loan ratio was 3.13%, down 5 bps month-on-month; the margin of safety remained high.
The 3Q23 core Tier 1 capital adequacy ratio, Tier 1 capital adequacy ratio, and capital adequacy ratio were 9.3%, 12%, and 13.2% respectively, with changes of +30, +60, and -20 bps, respectively, from month to month.
Based on the external economic situation, industry policy changes, and company fundamentals, we fine-tune the profit forecast and expect 24E-26E net profit to be 31.7 billion, 34.4 billion, and 39.1 billion (previously 32.5 billion, 35.9 billion, 39.6 billion).
Investment advice: Strong performance sustainability, balanced asset distribution, and stable asset quality. 2024E, 2025E, 2026E PB0.71 X/0.63X/0.57X; PE 5.39X/4.95X/4.33X. We believe that Bank of Jiangsu has three core competencies:
The first is small and micro business: combining historical endowments with fintech; the second is public business: manufacturing and infrastructure are the cornerstone of the public, and the development of southern Jiangsu and northern Jiangsu is balanced; third, retail business: it shows advantages in scale and has long-term competitiveness. The company's core competitiveness, good interest spread trends, high-quality asset quality and capital replenishment will guarantee the sustainability of Jiangsu banking performance.
Comparing comparable high-quality peers horizontally, the company's valuation and pricing is expected to be restored to a level of 0.8 times PB or more based on fundamental matching, maintaining a “buy” rating.
We have closely followed the Bank of Jiangsu. For details of previous in-depth reports, see “In-depth | Bank of Jiangsu: How Core Competitiveness Supports Continued Growth”, “In-depth Recommendation | Bank of Jiangsu: Deeply Cultivating Jiangsu, a Moat with High-End Manufacturing and SME Loans”, and “Deep | Bank of Jiangsu: High Quality Banks Entering the Market — Core Competitiveness and Sustainability Research”.
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.
