Incident: The Bank of Nanjing released its 2024 three-quarter report. During the reporting period, the company achieved revenue of 38.558 billion yuan, +8.03% year on year; realized net profit to mother of 16.663 billion yuan, +9.02% year over year; weighted ROE was 11.31%, -0.13pct year on year. By the end of the reporting period, the company's non-performing rate was 0.83%, and the provision coverage rate had dropped slightly to 340.40% month-on-month.

The scale has grown steadily, and interest spreads have increased marginally. As of the end of the reporting period, the company's total loans were 1.24 trillion yuan, +12.52%, of which public and retail loans were +14.34% and +7.30% respectively at the end of the previous year; total company deposits were 1.4 trillion yuan, +2.42% compared to the end of the previous year. Among them, term deposits accounted for +4.87pct to 80.90% month-on-month compared to the end of 24H1, and the regular trend continues. During the reporting period, the company's net interest spread (estimate) was 1.37%, -20 bps year over year, +1 bp month-on-month; of these, the interest rate was 4.13%, the interest rate payment rate was 2.40%, the interest rate decline narrowed marginally, and the interest payment rate continued to improve.

The decline in net interest income narrowed, and total return on investment supported revenue growth. During the reporting period, the company's net interest income was 19.614 billion yuan, -1.36% year over year, and the decline narrowed quarter by quarter; intermediate business revenue was 3.504 billion yuan, +11.71% year over year; net investment income plus fair value change income totaled 15.246 billion yuan, +16.58% year over year, which was the main support for revenue growth. The company's cost-revenue ratio was 25.32% during the reporting period, -2.21pct year on year, and cost control continued to be effective.

The quality of assets remains stable, and the ability to offset risks is sufficient. As of the end of the reporting period, the company's non-performing rate was 0.83%, the same as the end of 24H1, and -7 bps compared to the end of the previous year; the attention rate was 1.14%, +7 bp at the end of 24H1, and -3 bp compared to the end of the previous year. The 24Q3 quarterly provision was 2.79 billion yuan, an increase of 0.14 billion yuan over the previous year; as of the end of the reporting period, the company's provision coverage rate was 340.40%, 4.62 pct at the end of 24H1, and 20.18 pcts at the end of the previous year.

Investment advice: The Bank of Nanjing's revenue and profit growth rate has increased, the cost-revenue ratio and non-performing rate have continued to fall, and the high-quality development trend continues. The company's revenue for 2024-2026 is estimated to be 48.503, 51.709, 55.503 billion yuan, net profit due to mother of 20.203, 22.024, 24.153 billion yuan, and net assets per share of 17.48, 19.75, 22.22 yuan. The PB valuation corresponding to the closing price on November 5 is 0.58, 0.52, and 0.46 times. Maintain a “buy” rating.

Risk warning: macroeconomic growth declines, net interest spreads continue to narrow, asset quality deteriorates