Key points of investment
Bank of Changsha's revenue increased 7.9% year-on-year in 24Q1, and the revenue growth rate was resilient.
Overview of the data
Bank of Changsha's net profit for 24Q1 increased 5.8% year on year, down 3.8 pc from 23A; revenue increased 7.9% year over year, and the growth rate decreased slightly by 0.6 pc from 23A. The Bank of Changsha had a defect rate of 1.15% at the end of 24Q1, which was flat month-on-month; the provision coverage rate dropped slightly by 1pc to 313% compared to the end of 23Q4.
Strong revenue resilience
Bank of Changsha's net profit for 24Q1 increased 5.8% year on year, down 3.8 pc from 23A; revenue increased 7.9% year over year, and the growth rate decreased slightly by 0.6 pc from 23A. The revenue growth rate was in the top two listed commercial banks in the disclosed data, and the revenue growth rate was in the top two of the listed commercial banks in the disclosed data, and the revenue growth rate was strong. Looking at the main driving factors, other non-interest growth rates have rebounded, and impairment has increased. (1) Not closely related. Bank of Changsha's other non-interest rate increased 60% year over year in 24Q1, and the growth rate rebounded sharply by 69pc from month to month. (2) Related to impairment, Bank of Changsha's impairment losses increased 13% year-on-year in 24Q1, and the growth rate was +3pc month-on-month.
Looking ahead, benefiting from the low base of interest spreads, the Bank of Changsha's annual revenue and profit growth rate is expected to remain stable at the Q1 level.
Interest spreads declined month-on-month
The 24Q1 interest spread (at the beginning and end of the period, same below) was 2.18%, down 3 bps from month to month. (1) In 24Q1, asset-side returns fell 10 bps to 4.43% month-on-month, mainly due to LPR repricing, compounded by the downward impact of industry loan interest rates. (2) The 24Q1 debt-side cost ratio improved by 7 bps to 2.17% month-on-month, mainly due to the release of deposit interest rate reduction dividends. Looking ahead, the Bank of Changsha is still under pressure to narrow interest spreads in the future.
Poor levels are stable
Bank of Changsha's non-performing rate remained flat at 1.15% month-on-month at the end of 24Q1, and the bad indicators remained stable. The attention rate increased by 17 bps to 1.99% month-on-month. The fluctuation in the attention rate was judged to be related to fluctuations in the quality of retail assets. In terms of provision, Bank of Changsha's provision coverage rate dropped slightly by 1pc to 313% at the end of 24Q1.
Profit forecasting and valuation
The net profit of Bank of Changsha is expected to increase by 6.52%/10.93%/11.50% year-on-year in 2024-2026, corresponding to BPS16.41/18.12/20.03 yuan. The current price corresponds to 0.48/0.43/0.39 times PB. Maintain the target price of 9.06 yuan, corresponding to PB 0.55x in 2024, 15% of the current price space, and maintain the “buy” rating.
Risk warning: The macroeconomic economy has stalled, and the bad situation has been greatly exposed.