Profits have maintained positive growth. Everbright Bank's 24Q3 revenue year-on-year was -8.7%, and net profit to mother was +2.3% year-on-year.

24Q1-3 revenue -8.8% YoY, net profit to mother +1.9% YoY. Other net income in 24Q3 was +8.43% year-on-year, with the increase mainly due to income from changes in fair value.

Asset quality is steady, and core capital has been further consolidated. The 24Q3 non-performing loan ratio was 1.25%, flat from month to month.

The provision coverage rate was 170.73%, -1.72pct month-on-month. Everbright Bank's capital was further consolidated. The 24Q3 core Tier 1 capital adequacy ratio, Tier 1 capital adequacy ratio, and capital adequacy ratio were 9.67%, 11.83%, and 13.89%, respectively, compared with +0.07pct, +0.04pct, and +0.01pct at the end of Q2.

It has served the real economy solidly, and loan growth has been steady. The company insists on serving the real economy and actively writes “five major articles”. The total loan amount was about 3.9 trillion yuan, up 3.62% year over year. The company is increasing its efforts to lend to key areas and weak links. Tech finance, green finance, and inclusive finance loans increased by +34.08%, +33.47%, and +14.01%, respectively, compared to the end of '23.

Investment advice. We forecast EPS to be 0.67, 0.68, 0.69 yuan in 2024-2026, and net profit growth rates of 0.23%, 1.23%, and 1.50%. We obtained a reasonable value of 3.84 yuan based on the DDM model (see Table 2); according to the PB-ROE model, the 2024E PB valuation was 0.51 times (0.56 times that of a comparable company), and the corresponding reasonable value was 4.47 yuan. Therefore, a reasonable value range of 3.84-4.47 yuan (corresponding to 2024 PE is 5.70-6.64 times, corresponding PE is 5.69 times for peer companies), maintaining the “superior to market” rating.

Risk warning: The solvency of enterprises has declined, asset quality has deteriorated dramatically; financial supervision policies have undergone major changes.