On the evening of October 30, 2024, the Postbank disclosed its report for the third quarter of 2024. The year-on-year growth rates of 24Q1-3 revenue, PPOP, and return to mother profit were 0.1%, -1.8%, and 0.2%, respectively. The growth rates were 0.2, 4.3, and 1.7 percentage points higher than 24H1, respectively, and the net profit growth rate turned negative. Driven by cumulative performance, scale growth, other non-interest, and provision accruals are the main positive contributions, with interest spreads, income, and cost-to-revenue ratios making negative contributions.

Core views:

Highlights: (1) The decline in fee revenue growth narrowed, and profit growth turned negative. The revenue growth rate for the first three quarters was -12.7%, and the decline was 4.1 percentage points narrower than the half-year. Net profit to mother increased from -1.5% in the first half of the year to 0.2%, turning negative.

(2) The Postbank's retail resource endowment is excellent, and AUM continues to increase. As of the end of September 2024, Postbank's retail AUM reached 16.4 percent, up 11.4% year on year, and retail AUM maintained double-digit growth for four consecutive years; the number of VIP customers, Fujia and above customers was 55.16 and 5.69 million, respectively, up 9.1% and 19.2% year over year.

(3) An improvement in the cost-revenue ratio can be expected. At the beginning of October 2024, the board of directors of the company passed the “Proposal on Adjusting the Pricing of Savings Agent Fees for Deposit-Absorption Business of China Post Savings Savings Bank Co., Ltd. and China Post Group Co., Ltd.” The deposit savings agency rates for various terms were lowered. The average savings agency rate is expected to drop further, and the company's cost-revenue ratio can be expected to improve.

Concern: (1) There has been a slight increase in the non-performing loan ratio. As of the end of September 2024, the non-performing loan ratio was 0.86%, focusing on a loan ratio of 0.90%, and an overdue loan ratio of 1.11%, up 2BP, 9BP, and 5BP respectively from the end of June.

Overall asset quality is under slight pressure.

Investment advice: The Postbank is a major state-owned bank that is deeply involved in the county area, and has excellent retail resource endowments. Adhere to the retail banking strategy, the asset structure has been improved, the asset quality is stable, and the provisions are sufficient. We maintain a “Highly Recommended” rating.

Risk warning: Interest spreads continue to narrow; retail and wealth management business development falls short of expectations.