Introduction to this report:
Minsheng Bank's performance report for the third quarter of 2023 is generally in line with expectations. Q3 Revenue growth is improving, net profit growth exceeds expectations, net interest spreads are rising steadily, and asset quality continues to improve.
Key points of investment:
Investment suggestions: Maintain Minsheng Bank's 2023-2025 net profit growth forecast of 4.47%/9.49%/11.99%, corresponding to EPS 0.77/0.85/0.96 yuan. Considering that Minsheng Bank's risk mitigation is beginning to be effective, and that the risk of adverse events has decreased under the economic recovery trend, the company's target price was raised to 4.36 yuan, corresponding to 0.36 times PB in 2023, and raised to an increase in holdings rating.
Q3 Net profit growth exceeded expectations. Q3 The net profit growth rate reached 7.2%, which is at the top level of its peers.
Q3 The quarterly revenue growth rate increased 8.5pc to 1.1% month-on-month, mainly due to: ① Credit expansion accelerated and interest spreads remained stable, and net interest income growth increased by 2.1pc month-on-month; ② other non-interest income increased high; ③ the base for the same period last year was low. Revenue growth rebounded and the negative trend continued to improve, making Minsheng Bank's Q3 net profit release more positive than that of its peers.
Net interest spreads have been rising steadily. Q3 The net interest spread in a single quarter increased by 1 bps month-on-month. The reasons include: ① The asset side contributed significantly. According to estimates, the yield on interest-bearing assets rebounded in the first three quarters, mainly due to the increase in the share of loans in the asset structure, the increase in the share of retail loans in total loans, while the share of low-yield mortgage loans within retail loans declined, and the share of credit cards increased; ② The absolute value of Minsheng Bank's net interest margin itself is already at a very low level, and there is limited room for decline.
Asset quality continues to improve. The bad rate and attention rate fell by 2 bps and 1 bps, respectively, from month to month, and have been declining for many consecutive quarters. Despite a marked decline in the level of Q3 provision planning, the provision coverage rate still increased by 2.4 pc over month, indicating a reduction in the risk of failure generation.
Risk warning: Demand recovery falls short of expectations.