Recently, Everbright Bank disclosed its report for the third quarter of 2024. The year-on-year growth rates of 24Q1-3 revenue, PPOP, and profit to mother were -8.76%, -10.88%, and 1.92%, respectively. The growth rates changed by +0.01, -0.36, and +0.20 percentage points from 24H1, respectively. Revenue and profit growth rates were steady, and the annualized weighted average ROE was 9.66%.

Driven by cumulative performance, scale growth, other non-interest, and provision accruals are the main positive contributions, with interest spreads, income, and cost-to-revenue ratios making negative contributions.

Core views:

(1) The revenue growth rate remained low, and other non-interest revenue contributed positively. The company achieved net handling fee revenue of 15.2 billion yuan in the first three quarters of 2024, a year-on-year decrease of 20.6%, and the revenue growth rate remained low. Other non-interest income increased 26.8% year-on-year to 14.6 billion yuan in the first three quarters, mainly due to increased investment income and profit and loss from changes in fair value.

(2) Stable asset quality. The company's non-performing loan balance at the end of the third quarter of 2024 was 48.5 billion yuan, an increase of 1 billion yuan over the end of the previous year. The non-performing loan ratio at the end of the third quarter was 1.25%, the same as at the end of the previous year. The provision coverage rate at the end of the third quarter was 171%, down 1.72 percentage points from the end of the previous quarter.

(3) The cost-to-revenue ratio increased slightly, and credit impairment losses decreased year-on-year. The company's cost-revenue ratio for the first three quarters of the first three quarters of 2024 was 27.6%, up 1.6 percentage points year-on-year. Credit impairment losses of 24.6 billion yuan in the first three quarters, a year-on-year decrease of 30.7%, were the main driving factors supporting the increase in net profit to mother.

(4) The pace of asset scale expansion has slowed, and the growth rate of deposits and loans has remained low. The company's total assets increased 0.7% year-on-year to 6.9 trillion yuan at the end of the third quarter of 2024, up 1.7% from the beginning of the year. Among them, total loans increased 3.6% year over year to 3.9 trillion yuan, and deposits decreased 1.6% year over year to 4 trillion yuan.

(5) Further consolidation of core capital. The 24Q3 core Tier 1 capital adequacy ratio, and Tier 1 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, the capital adequacy ratio increased slightly, respectively.

Investment advice: Everbright Bank's fundamentals are solid and stable, and the quality and efficiency of operation and management continues to be optimized. Given that the banking industry's 24-year performance pressure is higher than in '23, the overall profit forecast for '24 has been lowered, Everbright Bank's three-quarter performance is stable, and asset quality is stable, so we maintain a “Highly Recommended” rating.

Risk warning: Financial concessions, falling interest spreads; steady growth policies fall short of expectations, and economic recovery falls short of expectations.