In 1Q24, the Bank of Beijing's revenue increased 7.9% year on year, and net profit to mother increased 5.0% year on year. The revenue growth rate increased significantly; the net profit growth rate increased marginally. Specifically, net interest income increased 1.9% year on year, up 4.1 pct from 2023; non-interest increased 27.2% year on year, mainly from other non-interest income.
Net interest income in 1Q24 fell 0.2% month-on-month, and single-quarter annualized interest spreads declined by 4 bps to 1.49%; asset-side returns fell 7 bps to 3.66%, with steady asset-side returns benefiting from the company's consumer loans; debt-side interest rates declined 4 bps to 2.20%.
Asset and liability growth rate and structure: Loan deposits all increased year-on-year. Asset side: Loans grew well. 1Q24 credit added $104.45 billion in a single quarter, an increase of 2.69 billion over the previous year. The share of loans in interest-bearing assets increased 1.1 percentage points to 55.4% from the end of the fourth quarter. Debt side: Deposits increased year-on-year. First quarter deposits increased 5.3% month-on-month, single-quarter deposits increased by 110.21 billion yuan, an increase of 28.53 billion yuan year-on-year; the share of deposits in interest-bearing debt increased 1.1 percentage points from the end of the fourth quarter to 63.3%.
Net non-interest income: Fees are under pressure, and the non-interest growth is mainly due to other non-interest income contributions. Net non-interest income increased 27.2% year over year (10.5% year over year vs 2023), net processing fee revenue -16.1% year over year (VS 2023 -46.9% year over year), and net other non-interest income +51.3% year over year (VS 2023 +63.0% year over year); mainly due to low base contributions.
The defect rate continues to improve, and the generation of defects is declining. The company's defect rate at the end of 1Q24 was 1.31%, down 1bp from the end of the fourth quarter. It is estimated that the net annualized negative generation in a single quarter was 0.69%, a decrease of 38 bps over the previous quarter. The provision coverage rate was 213.13%, down 3.65 percentage points from the previous month; the loan ratio was 2.79%, down 7 bps from the previous month.
Investment advice: The company's current stock price corresponds to 2024E, 2025E, 2026E PB 0.46X/ 0.42X/ 0.38X.
Asset quality and expansion momentum were the two major factors that suppressed the Bank of Beijing's valuation in the early stages. Currently, with the progress of bad disposal and the advancement of strategic transformation, these two major factors have shown a clear positive trend. At the same time, the Bank of Beijing's high dividends and high dividends has also become an important advantage in the current environment. Maintain an “Overweight” rating.
Risk warning: The macroeconomy is under downward pressure; the company's performance and operation fall short of expectations; research information is not updated in a timely manner.