2024H1 revenue maintained positive growth, and the net interest margin improved markedly; China CITIC Bank achieved revenue of 109 billion yuan (YoY +2.68%) in the first half of 2024, and maintained positive revenue growth.

Looking at a single quarter, Q2 revenue increased 0.8% year on year. Among them, net interest income for the single quarter increased by 2.92% year on year, the first positive increase in a single quarter since 2023Q1. Mainly due to a marked decline in deposit cost ratio after the “manual interest compensation” ban, it fell from 2.14% in 2023H1 to 1.98% in 2024H1. The net interest spread rose from 1.70% in 2024Q1 to 1.77% in 2024H1, which better hedged the decline in return on assets and interest spreads improved significantly. Net income from fees and commissions decreased by 24.15% year on year in 2024Q2, and investment income also showed negative growth in a single quarter. However, due to the high increase in investment income in 2024Q1, 2024H1's non-interest income still achieved positive growth. The actual tax rate rose to 18.01% due to increased non-tax deductible expenses and reduced revenue from non-taxable items, and the net profit from 2024H1 to mother was 35.5 billion yuan (YoY -1.60%). Based on factors such as the slowdown in the overall expansion of the banking industry and the continued decline in asset-side returns, we lowered our profit forecast as follows: 2024-2026 net profit was 68/71.6/77 billion yuan (original value 72.1/79.3/82.9 billion yuan), YoY +1.5%/5.3%/7.7% (original value 7.5%/10.0%/4.6%); the current stock price corresponds to 2024-2026 PB 0.4/0.4 times, respectively, taking into account the recovery and high interest spreads The dividend attribute continues, maintaining a “buy” rating.

Support for public loans was strong, deposit growth was weak, and financial management achieved a high increase of 9.1 trillion yuan at the end of 2024Q2, up 3.07% year on year. The asset growth rate slowed slightly compared to the end of 2024Q1, and physical financing needs to be further recovered. Among them, the balance of public loans was 2.92 trillion yuan, up 6.48% year on year, slightly higher than retail loans (YoY +5.31%). Deposit growth is still weak. The year-on-year growth rate at the end of 2024Q2 was -0.36%, which may be related to the outflow of some deposits after the “manual interest compensation” rectification. At the end of 2024Q2, the investment scale of non-capital protected wealth management reached 1.92 trillion yuan (YoY +20.18%), and wealth management competitiveness continues to increase.

The non-performing rate is basically stable, and the provision rate is still strong. At the end of the implementation of the mid-term dividend plan in 2024Q2, the non-performing rate rose marginally by 1BP to 1.19%. Overall, it is at an all-time low. Among them, the non-performing ratio for public loans fell to 1.25%. Due to the weak resilience of retail customers, risk exposure increased in stages, and the retail loan non-performing ratio rose to 1.30%. The provision coverage rate at the end of 2024Q2 was 206.76%, down about 1 pct from the end of Q1.

In addition, China CITIC Bank announced its mid-term dividend plan, with a cash dividend of RMB 1.847 (tax included) for every 10 shares, with a medium-term dividend ratio of 29.20%. The high dividend attributes continue, and the investment value is highlighted.

Risk warning: Macroeconomic growth is declining, regulatory policies are being tightened, corporate transformation falls short of expectations, etc.