Revenue growth picked up in the second quarter. In the first half of 2023, Zhangjiagang Bank achieved a revenue of 2.386 billion yuan, an increase of 1.41% over the same period last year, and a net profit of 866 million yuan, an increase of 13.65% over the same period last year. Of these, revenue in the second quarter reached 1.194 billion yuan, an increase of 3.47 percent over the same period last year, an increase of 3.29pct over the same period last year, and a net profit of 357 million yuan, an increase of 9.61 percent over the same period last year, with a year-on-year growth rate of 17.06pct. The company's weighted ROE in the first half of 2023 was 5.47%, an increase in 0.27pct over the same period last year and enhanced profitability.
The scale of assets continues to expand, and the amount of credit to the public is increased. By the end of June, the bank's assets were 200.24 billion yuan, up 6.78 percent from the beginning of the year, the deposit balance was 156.025 billion yuan, 11.78 percent from the beginning of the year, and the loan balance was 121.661 billion yuan, an increase of 5.77 percent over the beginning of the year. Among them, the growth of loan scale is mainly driven by public loans. By the end of June, corporate loans to public loans increased by 8.18% compared with the end of last year, while retail loans increased by 2.75% over the end of last year. Public loans are still an important driving force for credit lending.
The net interest margin continued to narrow and asset-end yields fell. The bank's net interest margin for the first half of the year was 2.05%, narrowing 20bps compared with 2022 and 38bps compared with 2021. The bank's average net interest margin fell 5bps in the first half of 2023 from 2.10% in the first quarter, and the net interest margin continued the marginal downward trend, which may be mainly due to the downward loan yields caused by factors such as the decline in LPR and the weak recovery in credit demand. In the first half of 2023, the company's asset-end return was 4.24%, a year-on-year decrease in 22bps.
The quality of assets remains stable. Our estimated bad generation rate in the first half of 2023 rose 43bps to 1.29% year-on-year, a certain increase over the same period last year, which we estimate is mainly due to the economic downturn. The bank's non-performing loan ratio at the end of June was 0.88%, down 3bps from the end of March and 1 BPs from the beginning of the year; the final attention rate was 1.47%, up 3bps from the end of March. At the end of June, the company's provision coverage rate was 510.62%, which was lower than that at the end of March and 10.47pct at the end of March and the beginning of the year. However, the provision is still at a high level and the risk offset ability is good.
Investment advice: in the face of the current interest rate environment and the pressure of peer competition, Zhangjiagang Bank's asset-side demand and rate of return are under pressure in the short term, but in the long run, Zhangjiagang Bank insists on ploughing the local market and there is still plenty of room for growth. with the deepening of its "two small" strategy, we are optimistic about its sustainable profitability in the future.
We estimate that the 2023-2025 homing net profit is 18.81x20.82max 2.305 billion yuan, an increase of 11.8107x10.7% over the same period last year; the diluted EPS is 0.82x0.92max 1.02 yuan; and the current share price corresponds to PE 5.7Compar 5.1max 4.6xPowerPB is 0.67Universe 0.55x, maintaining the "overweight" rating.
Risk hint: the weakening macroeconomic situation may have a negative impact on the quality of bank assets.