6 月末资产、贷款、存款增速分别为13.8%、16.5%、13.9%，增速较3 月末+0.8pct、+0.4pct、+2.6pct。上半年新增贷款主要以对公为主，对公、零售、票据占比分别为68%、18%、14%。新增对公贷款主要投向基建、制造业、批零等。存款增长提速，但定期化趋势延续，6 月末活期率较23 年末-4.6pct 至48.1%。24H1 净息差较23 年-8bp 至1.42%，降幅优于同业，得益于手工补息整改及同业负债成本优化，负债成本有所改善。24H1 存款成本率较23 年-11bp。24H1 利息净收入同比+0.5%（24Q1 同比-1.9%）。Steady expansion in scale and optimization of debt costs
Bank of Hangzhou's 2024H1 net profit, revenue, and PPOP were +20.1%, +5.4% year-on-year, respectively. The growth rates were higher than 24q1-1.0pct, +1.9pct, and +0.9pct respectively. The revenue growth rate increased. The net profit growth rate was the highest among banks with disclosed performance. The 24H1 annualized ROA and ROE were 1.05% and 19.48% respectively, +0.05pct and +0.82pct year-on-year. We forecast an EPS of 2.91/3.42/4.00 yuan for 2024-26, and a BVPS forecast value of 18.03 yuan for 24, corresponding to 0.74 times PB. Comparatively, the company's 24-year wind unanimously predicted an average PB of 0.66 times. The company is rooted in high-quality regions, has a deep economic advantage, and the profit growth rate is expected to maintain the first tier of listed banks. They should enjoy a certain valuation premium. We gave the 24-year target PB 0.88 times and a target price of 15.87 yuan, maintaining an “gain” rating.
Steady expansion in scale and improvement in debt costs
The growth rates of assets, loans, and deposits at the end of June were 13.8%, 16.5%, and 13.9%, respectively, compared with +0.8 pct, +0.4 pct, and +2.6 pct at the end of March. The loans added in the first half of the year were mainly to the princess, accounting for 68%, 18%, and 14% for public, retail, and notes, respectively. New public loans were mainly invested in infrastructure, manufacturing, and zeroing. Deposit growth accelerated, but the trend of regularization continued. The balance rate at the end of June was 4.6pct to 48.1% compared to the end of June. The 24H1 net interest spread was superior to 23-8 bps to 1.42%. The reduction was superior to that of peers. Thanks to manual interest compensation and interbank debt cost optimization, debt costs have improved. The 24H1 deposit cost ratio is 23-11 bps. 24H1 net interest income +0.5% YoY (24Q1 -1.9% YoY).
The decline in revenue has narrowed, and the return on investment is outstanding
Net revenue from 24H1 fees and commissions was -9.9% YoY (-16.4% YoY in 24Q1), and overall revenue was still under pressure. Looking at the split structure, agency fee revenue was +38% compared to the same period, which contributed mainly to revenue collection. The decline in investment banking and guarantee fees was the main drag. The scale of financial management has picked up. At the end of June, Hangyin Wealth Management maintained a scale of 402.4 billion yuan, +20% over the same period last year. Investment returns continued to rise. 24H1's other non-interest ratio was +28.3% (24Q1 +36.4% YoY), accounting for an increase of 1 pct to 27% in revenue compared to 24Q1. Mainly due to increased investment income from transactional financial assets, the company's investment income and fair value change profit and loss in the first half of the year were +55.4% and -36.7%, respectively. The 24H1 cost-to-revenue ratio remained flat at 24.7% year over year.
The bad trend is stable, and the level of capital is consolidated
The company's defect rate and provision coverage rate at the end of June were 0.76% and 545%, respectively, the same as at the end of March, and -6pct, respectively. The non-performing ratio improved, and retail risk fluctuated. At the end of June, the non-performing ratio for public and retail sales increased by 3 bps, 22 bps, and 22 bps, respectively, compared to the end of 23, to 0.76% and 0.76%, respectively. The non-performing rates for mortgages, operating loans, and consumer loans increased by 3 bps, 22 bps, and respectively. We estimate that the bad generation rate has increased. The annualized bad generation rate in Q2 was 0.48%, +51bp compared to the previous month. The estimated annual credit cost in Q2 was -38 bps to 0.64% year-on-year, driving profit release. The capital adequacy ratio and core Tier 1 capital adequacy ratio at the end of June were 12.87% and 8.63% respectively. Compared with +17 bps and +17 bps at the end of March, the capital strength was consolidated.
Risk warning: Economic recovery fell short of expectations, and the deterioration in asset quality exceeded expectations.
