The first half of the year achieved a positive year-on-year increase in revenue and profit. The company achieved revenue of 113.043 billion yuan (YoY, +1.80%) in the first half of the year, and achieved net profit of 43.049 billion yuan (YoY, +0.86%) to mother. Among them, revenue of 55.292 billion yuan (YoY, -0.62%) was achieved in the second quarter, and net profit to mother was 18.713 billion yuan (YoY, +6.54%).

The company's revenue growth rate in the first half of the year was 2.4 pct narrower than in the first quarter, and the net profit growth rate rebounded 4.0 pct from the first quarter. The company's annualized weighted average ROE in the first half of the year was 11.00%, a year-on-year decrease of 0.92 pct.

Public loans have maintained relatively good growth. The company's total assets increased 4.65% year-on-year to 10.35 trillion yuan in the first half of the year, and the growth rate was relatively steady. On the asset side, loans increased 8.55% year over year to 5.67 trillion yuan in the first half of the year.

In the first half of the year, a total of 208.2 billion yuan was added in credit. In terms of items, 266.6/-33.1/-25.4 billion yuan was invested in public/personal/note loans respectively. Among them, public loans increased by 14.84% year on year, personal loans decreased by 0.81% year on year, and maintained relatively good growth in public loans. At the end of June, corporate loans and deposits (all excluding accrued interest) increased by 3.81% and 4.85% respectively from the beginning of the year. At the end of June, the company's core Tier 1 capital adequacy ratio was 9.48%, 0.28pct narrower than at the beginning of the year, and was under slight pressure.

Net interest spread for the first half of the year was 1.86%, and debt costs improved marginally. The net interest spread disclosed by the company in the first half of the year was 1.86%, a year-on-year decrease of 9 bps. On the asset side, yield on interest-bearing assets fell 21bps year on year to 3.84% in the first half of the year, with loan yield falling 31 bps year on year. On the debt side, the average cost ratio of interest-bearing debt fell 10 bps to 2.25% year on year in the first half of the year. Among them, deposit costs fell 20 bps year on year. Benefiting from the effects of falling deposit interest rates and manual interest compensation regulations, the company's debt costs improved marginally.

Net interest income has grown steadily, and investment income has performed well. The company's net interest income in the first half of the year increased 4.22% year on year to 74.891 billion yuan; non-interest net income decreased by 2.65% year on year to 38.152 billion yuan. Among them, net income from handling fees and commissions decreased by 19.42% year on year, mainly due to regulatory fee reduction policies and capital market fluctuations; investment income increased by 30.26% year on year, and investment income performance was impressive.

There have been fluctuations in asset quality. We estimated that the company's bad generation rate in the first half of the year was 1.18%, which remained stable.

The company's non-performing loan ratio at the end of the second quarter was 1.08%, up 0.01 pct from the end of the first quarter; the provision coverage rate was 237.82%, down 7.69 pct from the end of the first quarter. The attention rate at the end of the second quarter was 1.73%, up 0.03pct from the end of the first quarter. Overall, there have been fluctuations in the quality of the company's assets.

Investment advice: The company's overall fundamental performance is relatively stable. We slightly raised the company's profit forecast. The company's net profit for 2024-2026 is 78.2/80.7/84.4 billion yuan, corresponding to a year-on-year growth rate of 1.4%/3.2%/4.6%; diluted EPS is 3.76/3.88/4.06 yuan; PE corresponding to the current stock price is 4.6/4.5/4.3x, and PB is 0.47/0.44/0.41x, maintaining a “neutral” rating.

Risk warning: Macroeconomic recovery falls short of expectations and will drag down the company's net interest spreads and asset quality.