In the third quarter of 2024, the six major banks operated steadily as a whole, with their asset scale steadily expanding and asset quality maintained at a reasonable level.
According to the Wisdom Finance app, Minsheng Securities released a research report stating that the six major banks operated steadily as a whole in the third quarter of 2024, with their asset scale steadily expanding and asset quality maintained at a reasonable level. Among the six state-owned banks, revenue growth continued to decline, mainly due to the continued effects of policies such as the integration of report and operation reducing fees. On the profit side, profit growth rates improved, with most banks achieving positive profit growth; non-performing loan rates remained stable or slightly increased, and provisions remained at adequate levels. In addition, the government plans to inject capital into state-owned banks through the issuance of special national bonds, further strengthening their capital base, helping state-owned banks better cope with fluctuations in non-performing assets and potential credit risks, and enhancing the stability of the financial system. At the same time, capital replenishment helps banks better balance shareholder returns in future performance growth.
The main points of the Minsheng Securities report are as follows:
Event: On October 30, 2024, the six state-owned banks (Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank Corporation, Bank of Communications, Postal Savings Bank of China) disclosed their third quarter reports for the third quarter of 2024.
Revenue growth rates have marginally improved, and some banks are showing resilience in net interest margins.
In the first three quarters of 2024, the Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank Corporation, Bank of Communications, and Postal Savings Bank of China saw year-on-year revenue changes of -3.8%, +1.3%, +1.6%, -3.3%, -1.4%, and +0.1% respectively. The growth rates compared to the first half of 2024 increased by 2.2%, 1.0%, 2.3%, 0.3%, 2.1%, and 0.2% respectively. Industrial and Commercial Bank of China and Agricultural Bank of China saw a rebound in net interest income growth rates. In the first three quarters of 2024, their net interest income changed by -4.9%, +1.0%, -4.8%, -5.9%, +2.2%, and +1.5% respectively compared to the same period last year. The growth rates compared to the first half of 2024 changed by +1.9%, +0.8%, -1.7%, -0.7%, -0.1%, and -0.4% respectively.
The six banks have been steadily expanding their scale, with the Industrial and Commercial Bank of China and Agricultural Bank of China halting the downward trend in net interest margins in the third quarter of 2024, supporting their net interest income growth rates. In the first three quarters of 2024, the net interest margins of Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank Corporation, Bank of Communications, and Postal Savings Bank of China were 1.43%, 1.45%, 1.41%, 1.52%, 1.28%, and 1.89% respectively; compared to the first half of 2024, they remained unchanged, remained unchanged, decreased by 3 basis points, decreased by 2 basis points, decreased by 1 basis point, and decreased by 2 basis points.
Among the six state-owned banks, the negative growth rate of income continued.
In 24Q1-3, the ICBC, ABC, BOC, CCB, BCM, and PSBC saw respective year-on-year decreases of -9.0%, -7.6%, -3.9%, -10.3%, -14.0%, and -12.7% in income mainly due to the continued effects of cost reduction policies such as the integration of reporting and banking. BOC and CCB displayed impressive growth rates in other non-interest income.
In 24Q1-3, the ICBC, ABC, BOC, CCB, BCM, and PSBC saw respective year-on-year increases of +17.5%, +23.6%, +49.9%, +71.5%, -1.7%, and +0.5% in other non-interest income. The growth rates changed by +11.9%, +4.7%, +27.7%, +15.7%, +8.5%, and -1.0% compared to 24H1, with the other state-owned banks maintaining higher growth rates in other non-interest income except for PSBC. The impact of the bond market's pullback by the end of September was relatively controllable. Additionally, CCB's exchange income significantly increased, further boosting its performance in non-interest income growth.
The profit growth rates of the six banks have all improved, with most banks achieving positive profit growth.
In 24Q1-3, the ICBC, ABC, BOC, CCB, BCM, and PSBC reported respective year-on-year increases of +0.1%, +3.4%, +0.5%, +0.1%, -0.7%, and +0.2% in attributable net income, with growth rates improved by 2.0%, 1.4%, 1.8%, 1.9%, 0.9%, and 1.7% compared to 24H1 mainly due to the recovery in revenue growth.
On the expenditure side, the cost-to-income ratios have increased slightly, with ICBC and CCB showing relatively lower values. By the end of 24Q3, the cost-to-income ratios for ICBC, ABC, BOC, CCB, BCM, and PSBC were 25.1%, 28.9%, 26.8%, 25.2%, 30.4%, and 60.0% respectively, higher by 1.4%, 1.5%, 1.3%, 1.1%, 0.4%, and 0.1% compared to 24H1. Most banks saw a continued negative growth in asset impairment losses, but in Q3, the provision feeding into profits decreased compared to Q2. ICBC, ABC, BOC, CCB, BCM, and PSBC reported respective year-on-year decreases of -12.5%, +1.2%, -5.8%, -12.0%, -7.3%, and -10.4% in asset impairment losses in 24Q1-3, with changes of +4.0%, +2.5%, -5.8%, -3.8%, +2.1%, and +6.1% compared to 24H1.
Asset size expansion remains steady, with most banks experiencing a slowdown in deposit and loan growth.
Amid bond market trends, state-owned banks actively allocate non-loan assets. With loan growth generally slowing down, most banks have seen marginal increases in asset size growth. By the end of 24Q3, ICBC, ABC, BOC, CCB, BCM, and PSBC's total assets saw year-on-year increases of +8.7%, +12.5%, +7.3%, +8.1%, +5.5%, and +9.3%, with changes of +0.8%, +2.2%, -1.8%, +2.8%, +2.9%, and +0.8% compared to 24H1.
On the lending side, in 24Q1-3, the total loans of ICBC, ABC, BOC, CCB, BoCom, and PSBC increased by +9.0%, +10.5%, +8.6%, +8.9%, +6.8%, and +9.5% respectively year-on-year. Except for BoCom, the growth rates of the other banks all declined compared to 24H1. Looking at a single quarter, the loan growth of state-owned banks in 24Q3, except for BoCom, was lower than the same period last year, a trend visible in both corporate and individual loans.
On the deposit side, in 24Q1-3, the total deposits of ICBC, ABC, BOC, CCB, BoCom, and PSBC increased by +1.8%, +3.3%, +4.5%, +2.3%, +1.0%, and +11.2% respectively year-on-year, with changes compared to 24H1 at -0.4pct, -0.8pct, -0.7pct, -1.5pct, +0.4pct, -0.5pct.
Non-performing loan ratios remained stable or slightly increased, with provisions being maintained at adequate levels.
By the end of 24Q1-3, the non-performing loan ratios of ICBC, ABC, BOC, CCB, BoCom, and PSBC were 1.35%, 1.32%, 1.26%, 1.35%, 1.32%, and 0.86% respectively. Among them, BOC and PSBC saw a 2 basis point increase in non-performing loan ratios from the end of 24H1. The non-performing loan ratios of the other state-owned banks remained flat compared to the end of 24H1. By the end of 24Q3, except for ICBC, the provision coverage ratios of state-owned banks had slightly decreased but still remained at adequate levels. The provision coverage ratios of ICBC, ABC, BOC, CCB, BoCom, and PSBC at the end of 24Q3 were 220%, 302%, 199%, 237%, 204%, and 302% respectively.
Related symbols: Industrial and Commercial Bank of China (601398.SH), Agricultural Bank of China (601288.SH), Bank of China (601988.SH), China Construction Bank Corporation (601939.SH), Bank of Communications (601328.SH), Postal Savings Bank of China (601658.SH).
Risk reminder: Macroeconomic fluctuations exceed expectations; deterioration in asset quality; unexpected downward trend in net interest margin for the industry.
