Revenue maintained positive growth in the first half of the year. The company achieved revenue of 109.019 billion yuan (YoY, +2.68%) in the first half of the year, and achieved net profit of 35.49 billion yuan (YoY, -1.60%). Among them, revenue of 55.249 billion yuan (YoY, +0.80%) was achieved in the second quarter, and net profit to mother was 16.299 billion yuan (YoY, -3.69%). The company's revenue growth rate in the first half of the year was 2.0pct narrower than in the first quarter, and the growth rate of net profit to mother was 1.9pct narrower than in the first quarter. The company's annualized weighted average ROE in the first half of the year was 10.69%, down 1.46pct year on year.

The growth rate of scale has slowed. The company's total assets increased by 3.07% year-on-year to 9.1 trillion yuan in the first half of the year, and the growth rate has slowed. On the asset side, loans increased by 3.97% year-on-year to 5.59 trillion yuan in the first half of the year. In the first half of the year, a total of 95.3 billion yuan of new credit was invested. Looking at the breakdown, investment in public/personal/bill loans was 220.8/44.9/-170.4 billion yuan respectively. Among them, public loans and personal loans increased 6.48% and 5.31% year-on-year respectively.

At the end of June, corporate loans and deposits (all excluding accrued interest) increased by 1.73% and 2.16% respectively from the beginning of the year.

At the end of June, the company's core Tier 1 capital adequacy ratio was 9.43%, up 0.44pct from the beginning of the year.

Net interest spreads improved marginally in the first half of the year. The net interest spread disclosed by the company in the first half of the year was 1.77%, down 8 bps year on year, but it rebounded 7 bps from the first quarter, improving marginally. On the asset side, yield on interest-bearing assets fell 19bps year on year to 3.83% 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 decreased by 9 bps to 2.12% year on year in the first half of the year. Among them, deposit costs fell 16 bps year on year. Benefiting from the effects of falling deposit interest rates and manual interest compensation regulations, the company's debt costs also improved.

Net interest income remained stable, and investment returns performed well. The company's net interest income in the first half of the year decreased by 0.82% year on year to 72.608 billion yuan; non-interest net income increased 10.44% year on year to 36.411 billion yuan. Among them, net revenue from handling fees and commissions decreased by 14.22% year on year, mainly due to reduced escrow commissions and consignment revenue; investment income increased 39.21% year over year, showing impressive performance.

There have been fluctuations in asset quality. We estimated that the company's bad generation rate in the first half of the year was 1.26%, up from the first quarter. The company's non-performing loan ratio at the end of the second quarter was 1.19%, up 0.01 pct from the end of the first quarter; the provision coverage rate was 206.76%, down 1.03 pct from the end of the first quarter. The attention rate at the end of the second quarter was 1.62%, up 0.02pct from the end of the first quarter. Overall, the quality of the company's assets has fluctuated.

Investment advice: The company's overall fundamental performance is relatively stable. We slightly lowered the company's profit forecast. The company's net profit for 2024-2026 is 67.8/71.6/75.6 billion yuan, corresponding to a year-on-year growth rate of 1.2%/5.5%/5.6%; diluted EPS is 1.39/1.46/1.54 yuan; PE corresponding to the current stock price is 5.2/4.9/4.7x, and PB is 0.54/0.50/0.46x, maintaining the “superior to the market” rating.

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