Incident: The company released its 2024 three-quarter report.

Net profit growth rate improved marginally, with depreciation rushing back profit: In the first three quarters of 2024, the company achieved operating income and net profit of 569.022 billion yuan and 255.776 billion yuan, with year-on-year changes of -3.3% and 11.03%, respectively, and a year-on-year decrease of 1.02 percentage points. There has been a marginal improvement in the company's performance, mainly benefiting from the impact of non-interest business contributions and provision recovery. In the first three quarters of 2024, the company's credit impairment loss was 109.583 billion 0.13%. The decline was narrower than in the first half of the year, and net profit turned slightly positive; the annualized weighted average ROE was based, down 11.95% year on year, and the decline widened, reaching 24.47% in Q3. The decline in interest spreads narrowed, and the growth rate of deposits and loans remained stable: in the first three quarters of 2024, the company's net interest income was 440.817 billion yuan, down 5.89% year on year; net interest spread was 1.52%, down 0.23 percentage points year on year, down 0.02 percentage points from the first half of the month. The decline narrowed, and it is expected to benefit from debt-side cost optimization. In the 12024Q3 single quarter, the company's interest income and interest expenses changed by -2.73% and 1.69%, respectively, year-on-year, and the growth rate of interest expenses narrowed markedly. The growth rate of deposit loans remained stable, but the increase was lower than the same period last year. It was mainly affected by the suspension of manual interest payments in the first half of the year. Public loans and demand deposits were greatly affected, and credit investment in key areas remained high. By the end of September, the company's various loans amounted to 25.75 trillion yuan, an increase of 7.92% over the beginning of the year.

Among them, public loans increased by 10.4%, and loans in key areas such as strategic emerging industries, technology-based enterprises, green loans, inclusive finance, and core industries of the digital economy maintained relatively rapid growth; retail loans increased 1.36% from the beginning of the year; and the company's various deposits were 28.56 trillion yuan, up 3.26% from the beginning of the year. Among them, time deposits and demand deposits changed by 6.17% and 40.01%, respectively, from the beginning of the year.

Revenue continued to be pressured, and investment and exchange business led to a high increase in non-interest rate: in the first three quarters of 2024, the company's non-remittance income was 128.205 billion yuan, up 6.82% year on year. Among them, intermediate business revenue was 85.541 billion yuan, down 10.29% year on year, which is expected to be mainly dragged down by the decline in agency business revenue. Other non-interest income benefited from changes in fair value, improved earnings and a significant increase in exchange income. In the first three quarters of 2024, the company's other non-profit revenue was 43.061 billion yuan, up 71.5% year on year. Among them, investment income was 14.672 billion yuan, and profit and loss increased by 7.231 billion yuan year on year, up 4 times year on year.

0.8% increase; fair value change profit and loss of 4.861 billion yuan, which changed from losses in the same period last year to positive growth; the quality of foreign exchange assets was stable and improving, and risk compensation capacity was enhanced: as of the end of September, the company's non-performing rate was 1.35%, down 0.02 percentage points from the beginning of the year and the same as the end of June; provision coverage rate was 237.03%, down slightly from the beginning of the year and the end of June. Capital strength has been steadily improving. As of the end of September, the company's capital adequacy ratio and core Tier 1 capital adequacy ratio were 19.35% and 14.1% respectively, up 0.1 percentage points and 0.09 percentage points respectively from the end of June. The national plan supplements the core tier 1 capital of major banks and helps enhance the company's capital strength. Investment suggestions: As one of the major state-owned banks, the company has obvious advantages in integrated management. It is ahead of its peers in terms of market share and dividend ratio. The dividend value is outstanding. It continues to promote the transformation of the “three major strategies” of housing leasing, inclusive finance, and fintech, and the results are gradually being unleashed. The growth rate of performance has improved, the overall margin has narrowed, deposits and loans have maintained steady growth, and asset quality has been steady, moderate and positive. Combining the company's fundamentals and stock price elasticity, we were given a “recommended” rating for the first time. The BVPS for 2024-2026 was 12.82 yuan/13.81 yuan/14.88 yuan, corresponding to the current PB price of 0.62X/0.57X/0.53X Risk warning: risk of deteriorating asset quality due to the economy falling short of expectations; risk of interest rates continuing to decline.