Caixin Financial News on November 5 (Reporter Zou Juntao) In the afternoon of November 5th, Bank of Guiyang held the third quarter performance briefing for 2024. At the meeting, an investor pointed out that the Bank of Guiyang's third quarter report's revenue and profit growth rates were not ideal. Chairman Zhang Zhenghai explained the reasons for the decline and stated that measures such as increasing lending efforts would be taken in the future to help maintain stable profit indicators.

Regarding the recent market discussion on the impact of reducing existing home loan interest rates on bank profits, Chief Financial Officer Li Yun stated that as of the end of September, the balance of the parent company's individual housing mortgage loans was 21.15 billion yuan, and the impact of this rate reduction on the bank's profitability is limited.

In addition, investors raised questions about the reasons for the improvement in the Bank of Guiyang's third quarter non-performing loan rate, the slowdown in loan growth, and other topics. The management of Bank of Guiyang also provided responses.

Notably, during this performance briefing, multiple investors once again requested Bank of Guiyang to increase the dividend payout ratio. The management of Bank of Guiyang only stated that they would 'comprehensively consider investor demands and implement a sustainable and reasonable dividend distribution policy.'

Continuous decline in profit indicators, how will the management respond to it

The third quarter report shows that during the reporting period, Bank of Guiyang achieved revenue of 10.937 billion yuan, a decrease of 4.42% year-on-year, and achieved a net profit attributable to the parent company's shareholders of 3.97 billion yuan, a decrease of 6.81% year-on-year. Wind data shows that in terms of single quarters, Bank of Guiyang has seen a continuous decline in net profit attributable to parent company shareholders for 6 consecutive quarters, with revenue shrinking year-on-year for 5 quarters in the same period.

In the Bank of Guiyang's third quarter report, it mentioned that factors such as transferring interest entities, adjusting asset structures, and continuous decline in market interest rates have led to a slight narrowing of net interest margin.

During today's third quarter performance briefing, an investor asked the management of Bank of Guiyang, "From the operational performance of your bank in the past two years, the revenue and profit growth rate of Bank of Guiyang is very disappointing compared to the GDP growth rate of Guizhou Province. What are the main reasons for this significant contrast in growth rates? It is clear that Bank of Guiyang is facing operational issues, so could you please explain the main reasons for this?"

Chairman Zhang Zhenghai pointed out that with the deepening of the industrial restructuring in Guizhou Province and the guidance of various policies supporting the real economy and small and medium-sized enterprises, our bank has taken multiple measures to support local economic development. As the asset-side interest rates decline, the net interest margin and net profit margin have decreased, leading to a slowdown in the growth rates of operating income and net income from the previous high base.

In addition, Zhang Zhenghai stated that there are new changes in the current banking operating environment, and the industry is entering a stage of high-quality development. Commercial banks are focusing more on the manipulation and pace of asset-liability, emphasizing differentiation in competitive advantages. Zhang Zhenghai mentioned that our bank will increase lending efforts, improve pricing management, strengthen cost control, and promote stable profit indicators in the future.

It is worth mentioning that the latest net interest margin of Bank of Guiyang in the third quarter report is 1.80%, which decreased by 38 basis points from the beginning of the year. However, compared to the 1.81% disclosed in the mid-year report, it only decreased by 1 basis point, indicating that the net interest margin of Bank of Guiyang has gradually stabilized.

Chief Financial Officer Li Yun also mentioned at today's meeting that in the industry trend of continuously narrowing net interest margins, our bank is continuously enhancing credit deployment capabilities while strengthening liability cost management. Adhering to the development concept of "quantity and price coordination," the management goal is to achieve a comprehensive balance of "quantity, price, and structure," continuously optimizing the deposit term structure, enhancing financial market trading and active liability capabilities, controlling interbank liability costs, gradually restoring the net interest margin. The net interest margin in the third quarter of 2024 is 1.8%, and it is expected to remain basically stable within the year.

Why has the non-performing loan ratio improved while the provision coverage ratio continues to increase?

Many investors have noticed that the non-performing loan ratio at Bank of Guiyang improved in the third quarter, but the provision coverage ratio is still increasing.

The third quarter report shows that as of the end of September this year, the non-performing loan ratio of Bank of Guiyang was 1.57%, a decrease of 0.05 percentage points from the end of the first half of the year, and a decrease of 0.02 percentage points from the beginning of the year. During the same period, the provision coverage ratio further increased to 262.53%, an increase of 18.03 percentage points from the beginning of the year. According to the mid-year report this year, as of the end of June, the non-performing loan ratio of Bank of Guiyang was 1.62%, an increase of 0.03 percentage points from the beginning of the year; and the provision coverage ratio was 257.81%, an increase of 13.31 percentage points from the beginning of the year.

During today's performance briefing, an investor asked why the non-performing loan ratio improved in the third quarter and the provision coverage ratio continued to increase? President Sheng Jun explained that our bank continuously expands the channels for handling non-performing loans, increases the intensity of non-performing loan disposal, disposed of a batch of outstanding non-performing loans in the third quarter, leading to a decrease in the non-performing ratio. At the same time, the provision coverage ratio increased due to the unchanged provision for impairment charges.

Caixin reporters noticed that investors are also quite concerned about the adjustment of the provision coverage ratio at Bank of Guiyang. During this year's mid-year performance briefing, an investor once asked the management of Bank of Guiyang, 'Are you adjusting the profit by increasing the provision coverage ratio as much as you want?' At that time, the management of Bank of Guiyang stated that our bank strictly follows management procedures, regularly updates measurement parameters, and makes asset impairment provisions, meeting regulatory requirements.

Is the company's loan growth slowing down? The management of Bank of Guiyang responded indirectly.

In addition, it is worth noting that during today's performance briefing, an investor asked the management of Bank of Guiyang, 'Since the beginning of this year, the company's loan growth has slowed down, what improvement plans do you have?'

President Sheng Jun of Bank of Guiyang stated that as of the end of September, the bank's balance of corporate loans was 294.732 billion yuan, an increase of 7.09% compared to the beginning of the year, slightly higher than the province's average growth rate. In the fourth quarter, the bank will continue to support high-quality development of the local economy, effectively serve the real economy.

The mid-year report shows that as of the end of June this year, Bank of Guiyang's total loan balance was 339.401 billion yuan, an increase of 15.361 billion yuan compared to the beginning of the year, a growth of 4.74%. Among them, the balance of corporate loans (including discounts) was 290.724 billion yuan, an increase of 15.518 billion yuan compared to the beginning of the year, a growth of 5.64%. The data shows that Bank of Guiyang only added 4.008 billion yuan to the balance of corporate loans in the third quarter of this year.

The third-quarter report shows that Bank of Guiyang's credit issuance mainly revolves around the implementation of 'five key initiatives', carrying out characteristic operations, continuously deepening its presence in the region, fully supporting the construction of Guiyang's modern industrial system, focusing on key regions, key industries, and key customers, steadily increasing support to the real economy, and fully constructing a high-quality credit business system.