1Q24 Changshu Bank's revenue remained high and stable year on year, with a year-on-year increase of 12.0%; of these, net interest income increased 5.6% year over year, and non-interest rate increased 70% year on year. Net profit to mother increased 19.8% year over year. Growth in scale is the main support for steady revenue. Quarterly, interest spreads stabilized month-on-month, and interest income growth was generally weak; non-interest income also grew relatively well. On the performance side, management expenses continued to improve, contributing to the release of profits.

Net interest income for the single quarter was +14.9% month-on-month, and interest spreads rebounded month-on-month on a low basis in the fourth quarter. In 1Q24, annualized interest spreads increased by 25 bps to 2.77% month-on-month, with asset-side returns rising 24 bps to 4.92% month-on-month (impact of one-time mortgage accrual in the fourth quarter of last year), while debt-side interest rates declined by 1 bps to 2.35% month-on-month.

Growth rate and structure of assets and liabilities: Credit growth mainly comes from the public sector, and the share of deposits continues to rise. Asset side: Credit growth in the first quarter mainly came from public support. 1Q24 credit increased by 12.8 billion dollars in a single quarter, an increase of 1.7 billion dollars over the previous year; of these, public loans increased by 7.9 billion yuan, an increase of 1.44 billion yuan over the previous year; retail sales increased by 3.06 billion yuan, a year-on-year decrease of 1.12 billion yuan.

Debt side: Deposit growth is good, and the share continues to rise. In the first quarter, deposits grew 14.4% month-on-month. Single-quarter deposits increased by 35.58 billion yuan, an increase of 8.8 billion yuan over the previous year; the share of deposits in interest-bearing liabilities continued to rise to 89.5%. Looking at the structure, savings deposits continue to grow at a high rate, and the trend of deposit periodization continues.

Asset quality: The defect rate increased slightly, and the defect generation rate improved significantly. The defect rate was 0.76%, a slight increase of 1 bp over the previous month. Net annualized negative generation in a single quarter was -0.08%, an improvement of 122 bps over 4Q23. Concern loans accounted for 1.23%, up 6 bps from the end of 2023. The provision coverage rate was 539.17%, up 1.19 percentage points from month to month; the loan ratio was 4.11%, up 7 bps from month to month.

Investment suggestions: The company's 2024E, 2026E PB 0.82X/ 0.69X/ 0.61X; the company focuses on personal business loan investment, has excellent risk control, and continues to expand the market through declining channels. Changshu Bank focuses on its business model, the customer structure continues to be smaller and diversified, and the asset quality remains at an excellent level. It is recommended to pay attention.

Risk warning: The macroeconomy is facing downward pressure, corporate deposit competition is under pressure, and operating performance falls short of expectations.