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农业银行(601288):稳健经营 量质齐升

Agricultural Bank (601288): Steady operation, volume and quality rise

天風證券 ·  Sep 13, 2024 07:06

Incidents:

Agricultural Bank released its mid-year earnings report for 24 years. In the first half of the year, the company achieved revenue of 366.8 billion yuan, YoY +0.29%, net profit to mother of 135.9 billion yuan, YoY +2.0%; a non-performing ratio of 1.32%, and a non-performing provision coverage rate of 303.9%.

Review summary:

The revenue growth rate was corrected. 24 In the first half of the year, revenue was 366.8 billion yuan, YoY +0.29%, up 2.05pct from 24Q1 (YoY -1.76%). Among them, 24H1's net interest income was 290.8 billion yuan, +0.15% year-on-year; non-interest income was 76 billion yuan, +0.86% over the same period last year.

The company's 24H1 net interest spread was 1.45%. The specific manifestation is: Interest income side: increase in financial investment income. The average yield on 24H1 interest-bearing assets was 3.22%, with loan yields falling continuously to 3.54% due to LPR; financial investment accounted for 28.6% of daily interest-bearing assets in the first half of the year, up 2.4 pcts from the structure at the beginning of the year, with a yield of 3.08%. Interest-bearing debt side: Cost management is effective, and deposit cost ratios release profit margins. The 24H1 interest-bearing debt cost ratio was 1.92%, down slightly from the same period last year. The deposit cost ratio of interest accrued costs was 1.70% (8 bps less than the end of 2023), and the share of interest expenses decreased by 2.4 pct compared to the end of 2023.

Stable interest spreads supported profit recovery. 24H1 Agricultural Bank's net profit growth rate was +2.0% year over year, compared to 24q1+3.63pct, mainly due to net interest spread rising 1 bps month-on-month.

Asset side: The expansion of interest-bearing assets is driven by loans to public loans. Agricultural Bank's interest-bearing assets totaled 41006.9 billion yuan in 24Q2, up 0.4% from 24Q1. Among them, the performance for public business was outstanding: loan balances for the infrastructure, manufacturing, real estate, construction, wholesale and retail sectors increased by 9.8%, 11.0%, 3.6%, 27.1%, and 5.3% compared to the end of last year, and overall loans to the public sector increased 3.8% month-on-month to 14729.9 billion yuan. Debt side: Stable absorption capacity.

Deposits, issued bonds, and interbank liabilities accounted for 80.0%, 7.3%, and 12.7% of interest-bearing liabilities, respectively, changes of -1.4, +0.6, and +0.8 pcts from the beginning of '24. The interest-bearing debt balance was $35,382.6 billion, +3.9% from the beginning of the year.

The 24Q2 deposit balance was $28,313 billion, up 2.1% from the end of 2023; of these, regular accounts for 57.9%.

Asset quality: Asset quality is improving, and provision coverage has increased slightly. At the end of 24Q2, the non-performing loan ratio was 1.32%, unchanged from month to month; the overall non-performing loan rate showed a positive trend of fluctuation. The coverage rate of non-performing provisions increased by 0.07pct to 303.9% from the beginning of the year.

Changes in the top ten shareholders: Hong Kong Central Clearing (Agent) Co., Ltd. increased its holdings by 0.01% to 8.73%, and Hong Kong Central Clearing Limited reduced its holdings by 0.05% to 0.88%.

Profit Forecast and Valuation:

Agricultural Bank 24H1 interest income declined year-on-year due to yield and debt costs, but asset-side expansion results are remarkable, asset quality is improving, and there is a foundation for future upward operations. We forecast the year-on-year growth rate of the company's net profit from 2024-2026 to be 2.56%, 3.16%, and 6.36%, corresponding to current BPS prices: 7.44, 7.99, and 8.57 yuan. Using the dividend discount model, the target price was estimated at 5.51 yuan, corresponding to 0.74 times PB in 24 years, with 22% of the current price space, maintaining a “buy” rating.

Risk warning: macroeconomic shocks; non-performing assets may be greatly exposed; interest rate pressure may increase due to a continued decline in interest rates.

The translation is provided by third-party software.


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