渝农商行(601077) - 2024 Q2 - 季度财报

Company Profile Basic Information This chapter provides Chongqing Rural Commercial Bank's basic corporate information, including legal name, stock codes (A-share: 601077, H-share: 03618), legal representative, registered address, listing exchanges, and auditor - The company is a bank listed on both the Shanghai Stock Exchange (stock code: 601077) and the Hong Kong Stock Exchange (stock code: 03618)[15][17] Business Overview The company's core business is divided into three major segments: Inclusive Finance, Corporate Finance, and Financial Markets Business, with subsidiaries involved in wealth management and financial leasing, and controlling 12 rural commercial banks - The company's main businesses include three major segments: Inclusive Finance, Corporate Finance, and Financial Markets, and it engages in wealth management and financial leasing through its subsidiaries[18][19] Development Strategy and Core Competencies The company aims to be a leading regional bank, focusing on supporting agriculture and small businesses, and advancing its retail-driven, technology-empowered, talent-strengthened strategy, underpinned by clear strategic positioning, innovative culture, efficient management, digital empowerment, and synergistic development across its three main business segments - The company has established a strategic direction of 'retail-driven, technology-empowered, talent-strengthened' and built an 'one core, four drivers' development system with 'big retail' as the core, driven by corporate finance, financial markets, financial technology, and talent teams[20][21] - Core competencies include: adhering to the development strategy of supporting agriculture and small businesses, innovative corporate culture, scientific and efficient management system, digital technology empowerment, significantly advantageous retail finance, deeply cultivated green corporate finance, and integrated synergistic financial market business[21][22][23] Financial Highlights Financial Highlights In H1 2024, the Group's operating revenue slightly decreased by 1.30% to 14.67 billion yuan, while net profit grew 6.18% to 7.56 billion yuan, and total assets increased 4.77% to 1.51 trillion yuan, maintaining a stable NPL ratio of 1.19% and a high capital adequacy ratio of 15.71% Key Financial Indicators for H1 2024 | Indicator | 2024 H1 | 2023 H1 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Operating Performance | | | | | Operating Revenue (Million Yuan) | 14,672.5 | 14,865.5 | -1.30% | | Net Profit (Million Yuan) | 7,560.7 | 7,120.5 | +6.18% | | Net Profit Attributable to Parent Company (Million Yuan) | 7,358.2 | 6,986.0 | +5.33% | | Basic Earnings Per Share (Yuan) | 0.64 | 0.61 | +0.03 | | Profitability | | | | | Net Interest Margin (%) | 1.54 | 1.70 | -0.16pp | | Net Interest Spread (%) | 1.63 | 1.79 | -0.16pp | | Cost-to-Income Ratio (%) | 25.23 | 31.20 | -5.97pp | Key Scale and Quality Indicators as of June 2024 | Indicator | June 30, 2024 | December 31, 2023 | Change from Year-Start | | :--- | :--- | :--- | :--- | | Scale Indicators | | | | | Total Assets (Million Yuan) | 1,509,871.0 | 1,441,082.0 | +4.77% | | Total Customer Loans (Million Yuan) | 706,864.6 | 676,710.6 | +4.46% | | Customer Deposits (Million Yuan) | 941,647.5 | 896,202.2 | +5.07% | | Equity Attributable to Parent Company Shareholders (Million Yuan) | 127,371.6 | 121,733.7 | +4.63% | | Asset Quality | | | | | Non-Performing Loan Ratio (%) | 1.19 | 1.19 | 0.00pp | | Provision Coverage Ratio (%) | 360.29 | 366.70 | -6.41pp | | Capital Adequacy Ratio | | | | | Core Tier 1 Capital Adequacy Ratio (%) | 13.83 | 13.53 | +0.30pp | | Capital Adequacy Ratio (%) | 15.71 | 15.99 | -0.28pp | Management Discussion and Analysis Overall Business Performance Analysis In H1 2024, the bank achieved steady growth in assets, deposits, and loans, with net profit increasing by 6.18% despite a slight decline in operating revenue, while maintaining a stable NPL ratio and actively supporting local economic development and risk control H1 2024 Operational Highlights | Category | Indicator | Amount/Ratio | Change from Year-End | | :--- | :--- | :--- | :--- | | Scale Growth | Total Assets | 1,509.87 billion yuan | +68.79 billion yuan | | | Deposit Balance | 941.65 billion yuan | +45.45 billion yuan | | | Loan Balance | 706.87 billion yuan | +30.15 billion yuan | | Operating Performance | Net Profit | 7.56 billion yuan | Year-on-year growth of 6.18% | | Asset Quality | Non-Performing Loan Ratio | 1.19% | Unchanged | | Risk Coverage | Provision Coverage Ratio | 360.29% | - | | Capital Level | Capital Adequacy Ratio | 15.71% | - | - The company actively serves major local strategies, with manufacturing loan balances reaching 72.49 billion yuan, ranking first in the city; inclusive micro and small enterprise loan balances reached 136.75 billion yuan, ranking first in Chongqing[35] - In terms of risk control, the company has solidified risk classification, strengthened digital risk control capabilities, and prudently met reasonable financing needs for 'whitelist' real estate projects[35] Financial Review This section analyzes the company's financial performance, detailing a slight decrease in operating revenue due to lower net interest income, offset by increased investment income and reduced operating expenses, leading to net profit growth, alongside steady asset and liability growth and stable asset quality despite rising special mention and overdue loans Income Statement Analysis In H1 2024, the Group's operating revenue decreased by 1.30% to 14.67 billion yuan, primarily due to a 7.99% decline in net interest income, but non-interest net income increased 27.27% and business and management expenses decreased 20.21%, resulting in a 6.18% rise in net profit to 7.56 billion yuan Changes in Key Income Statement Items | Item (Million Yuan) | 2024 H1 | 2023 H1 | Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 14,672.5 | 14,865.5 | (1.30) | | Net Interest Income | 11,081.0 | 12,043.6 | (7.99) | | Non-Interest Net Income | 3,591.5 | 2,821.9 | 27.27 | | Business and Management Expenses | (3,701.4) | (4,638.7) | (20.21) | | Credit Impairment Losses | (2,457.4) | (1,845.2) | 33.18 | | Net Profit | 7,560.7 | 7,120.5 | 6.18 | - Net interest margin and net interest spread were 1.54% and 1.63% respectively, both decreasing by 16 basis points year-on-year, primarily due to a decline in asset yields[52] Balance Sheet Analysis As of June 2024, the Group's total assets reached 1.51 trillion yuan, up 4.77% from year-end, driven by customer loans and financial investments, with customer deposits growing 5.07% to 941.65 billion yuan as the primary funding source, and total shareholder equity increasing 4.66% Major Components of Balance Sheet (Billion Yuan) | Item | June 30, 2024 | Change from Year-End | | :--- | :--- | :--- | | Total Assets | 1,509.87 | +4.77% | | Net Customer Loans and Advances | 676.74 | +4.55% | | Financial Investments | 619.02 | +3.38% | | Total Liabilities | 1,380.61 | +4.78% | | Customer Deposits | 941.65 | +5.07% | | Total Shareholder Equity | 129.26 | +4.66% | - Within the loan structure, corporate loans grew by 7.57%, while retail loans grew by 0.52%; corporate loans were primarily directed towards leasing and business services, water conservancy, environmental and public facilities management, and manufacturing[72][74] - In the deposit structure, personal deposits increased by 8.10%, raising their proportion of total deposits from 83.37% to 85.78%; corporate deposits, however, decreased by 10.95%[84][85] Cash Flow Statement Analysis In H1 2024, net cash flow from operating activities significantly increased by 124.5% to 44.99 billion yuan, while investing activities shifted to a net outflow of 48.29 billion yuan, and financing activities turned into a net inflow of 24.68 billion yuan, mainly due to increased debt security issuance and reduced repayments Cash Flow Statement Overview (Billion Yuan) | Item | 2024 H1 | 2023 H1 | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 44.99 | 20.04 | | Net Cash Flow from Investing Activities | (48.29) | 6.70 | | Net Cash Flow from Financing Activities | 24.68 | (30.86) | Loan Quality Analysis As of June 2024, the Group's NPL ratio remained stable at 1.19%, with a sufficient provision coverage ratio of 360.29%, although special mention loans and overdue loans slightly increased, while loan concentration ratios remained within regulatory limits Key Loan Quality Indicators | Indicator (%) | June 30, 2024 | December 31, 2023 | Change (Percentage Points) | | :--- | :--- | :--- | :--- | | Non-Performing Loan Ratio | 1.19 | 1.19 | 0.00 | | Special Mention Loan Ratio | 1.41 | 1.14 | +0.27 | | Overdue Loan Ratio | 1.52 | 1.42 | +0.10 | | Provision Coverage Ratio | 360.29 | 366.70 | -6.41 | - The total loans to the largest single borrower accounted for 3.68% of net capital, and total loans to the top ten customers accounted for 23.14% of net capital, both within regulatory requirements[97][98] Business Review The bank made progress across all business lines, including strong growth in inclusive finance, corporate loans supporting manufacturing and green finance, stable financial market operations, continuous financial technology empowerment, and strategic focus on county-level financial services with significant agricultural loan balances and innovative credit models Inclusive Finance Business Inclusive finance business showed strong performance with personal deposits growing 8.10% to 807.73 billion yuan, and micro and small enterprise loans exceeding 200,000 customers with a balance of 136.75 billion yuan, ranking first in the city for both outstanding balance and new increments - Personal deposit balance reached 807.73 billion yuan, an increase of 60.55 billion yuan from the end of the previous year, representing an 8.10% growth[116][117] - Inclusive micro and small enterprise loan customers exceeded 200 thousand, with loan balances reaching 136.75 billion yuan, an increase of 8.23 billion yuan from the end of the previous year, ranking first in the city for both outstanding balance and new increments[122] Corporate Finance Business Corporate finance business focused on serving the real economy and major strategies, with corporate loan balances growing 7.57% to 352.60 billion yuan, manufacturing loans reaching 72.49 billion yuan (ranking first in the city), and green credit balances increasing to 67.46 billion yuan, while actively supporting regional economic development - Corporate loan balance reached 352.60 billion yuan, an increase of 7.57% from the end of the previous year[122] - Manufacturing loans reached 72.49 billion yuan, a net increase of 6.82 billion yuan from the end of the previous year, with its share firmly ranking first in the city[123] - Green credit balance reached 67.46 billion yuan, a net increase of 5.47 billion yuan from the end of the previous year[123] Financial Markets Business Financial markets business developed steadily, with bond investments reaching 495.41 billion yuan, primarily in government and quasi-government bonds, and wealth management product balances totaling 123.29 billion yuan, supported by a diversified product system - Bond investment balance reached 495.41 billion yuan, with government bonds and public and quasi-government bonds collectively accounting for approximately 70%[129][78] - Wealth management product balance of the wealth management subsidiary reached 123.29 billion yuan, with 97 distribution agencies[132] Financial Technology The bank continues to advance its digital transformation, optimizing its financial technology organizational structure with over 600 personnel, strengthening its data middle platform, and expanding its mobile banking user base to 14.76 million and corporate online banking customers to 165,900 - Financial technology personnel exceeded 600, forming a technology talent echelon covering the financial capability landscape[135] - Mobile banking users reached 14.76 million, a net increase of 379.2 thousand this year; corporate online banking customers reached 165.9 thousand, a net increase of 6.2 thousand this year[140] County-Level Financial Business County-level financial business is a strategic priority, with agriculture-related loan balances reaching 240.46 billion yuan, supported by an extensive physical network and the self-developed 'Rural Revitalization Digital Financial Service Platform' that has pre-approved over 20.2 billion yuan in credit for 1.33 million farmers across nearly 98% of Chongqing's administrative villages - As of June 2024, the Group's agriculture-related loan balance reached 240.46 billion yuan[142] - 'Whole-village credit granting' business has covered 7,752 administrative villages in 38 agriculture-related districts and counties of Chongqing (coverage rate nearly 98%), providing pre-approved credit exceeding 20.2 billion yuan for 1.33 million farmers[147] Overview of Major Controlled and Invested Companies The bank's controlled and invested companies are operating steadily, with 12 rural commercial banks holding 5.25 billion yuan in total assets, Chongqing Rural Commercial Bank Financial Leasing achieving 1.02 billion yuan in net profit, Chongqing Rural Commercial Bank Wealth Management achieving 0.14 billion yuan, and Chongqing Xiaomi Consumer Finance achieving 0.04 billion yuan in net profit in H1 2024 Operating Performance of Major Controlled and Invested Companies (H1 2024) | Company Name | Total Assets (Billion Yuan) | Net Profit (Billion Yuan) | | :--- | :--- | :--- | | Chongqing Rural Commercial Bank Financial Leasing | 65.68 | 1.02 | | Chongqing Rural Commercial Bank Wealth Management | 2.92 | 0.14 | | Chongqing Xiaomi Consumer Finance | 18.64 | 0.04 | Key Issues in Operations Management focuses on the narrowing Net Interest Margin (NIM), slowing revenue growth, pressure on profit growth, asset quality, and impairment provisions, with NIM affected by declining market interest rates, and asset quality stable despite increases in special mention and overdue loans, while impairment provisions rose due to a lower comparative base in the prior year - Net Interest Margin (NIM) was 1.63%, a decrease of 10 basis points from the end of the previous year, primarily affected by declining market interest rates; the company plans to mitigate the decline by optimizing asset-liability allocation and pricing capabilities[152] - In terms of asset quality, the Non-Performing Loan (NPL) ratio (1.19%) remained stable, but the proportion of overdue loans (1.52%) and special mention loans (1.41%) slightly increased compared to the end of the previous year; management believes the overall risk is controllable due to good collateral coverage[157][158] - Credit impairment losses accrued in H1 amounted to 2.46 billion yuan, a year-on-year increase of 33.18%, primarily because a large amount of written-off loans were recovered in the same period last year, resulting in a lower comparative base[160] Risk Management The bank maintains a comprehensive risk management system, demonstrating stable asset quality and compliance with large exposure limits for credit risk, managing interest rate risk through gap analysis and stress tests, maintaining low foreign exchange risk exposure, and exceeding regulatory requirements for liquidity risk indicators, while also addressing operational, reputational, IT, and anti-money laundering risks - Credit Risk: The ratio of loans to the largest single customer to net capital was 3.68%, below the regulatory standard (≤10%)[98][165] - Market Risk: Interest rate sensitivity analysis indicates that a parallel increase of 100 basis points in interest rates would have a negative impact of 460 million yuan on net profit[171] Key Liquidity Risk Indicators (as of June 30, 2024) | Indicator | Value (%) | Regulatory Requirement | | :--- | :--- | :--- | | Liquidity Coverage Ratio | 338.40 | ≥100% | | Net Stable Funding Ratio | 128.29 | ≥100% | Capital Management The bank implements comprehensive capital management to maintain capital levels consistently above regulatory requirements, with the Group's capital adequacy ratio at 15.71%, Tier 1 capital adequacy ratio at 14.53%, and Core Tier 1 capital adequacy ratio at 13.83% as of June 2024, all at high levels, and a leverage ratio of 8.20% also meeting regulatory standards Capital Adequacy Ratios (Group) | Indicator (%) | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Core Tier 1 Capital Adequacy Ratio | 13.83 | 13.53 | | Tier 1 Capital Adequacy Ratio | 14.53 | 14.24 | | Capital Adequacy Ratio | 15.71 | 15.99 | - As of June 2024, the Group's leverage ratio was 8.20%, a decrease from 8.40% at the end of the previous year[208] Outlook For H2 2024, Chongqing's regional economy is expected to continue its recovery, and the bank will further advance its retail-driven, technology-empowered, talent-strengthened strategy and 'one core, four drivers' development system, focusing on enhancing operational efficiency, serving overall development, accelerating digital technology empowerment, safeguarding risk bottom lines, and improving management effectiveness to drive high-quality development - Strategic priorities for the second half of the year include: tapping into rural county markets, aligning with major strategic projects, accelerating digital technology empowerment, safeguarding risk control bottom lines, and enhancing value creation capabilities[211][212] Corporate Governance Overview of Corporate Governance During the reporting period, the bank maintained a sound corporate governance structure in strict compliance with laws and regulations, holding various board and supervisory meetings, with no significant discrepancies from governance requirements, and disclosed changes in directors, supervisors, and senior management, shareholdings, employee and institutional details, and dividend distribution plans - During the reporting period, the company held 1 general meeting of shareholders, 7 board meetings, 23 board special committee meetings, 6 supervisory board meetings, and 4 supervisory board special committee meetings[215] - As of June 2024, the Group had 14,592 active employees, with 14,156 at the bank itself; the bank has 1,743 branches, with its network covering all 38 administrative districts and counties in Chongqing[227][231] - The company distributed a 2023 annual cash dividend of RMB 0.2885 yuan per share (tax inclusive), totaling 3.28 billion yuan, representing 30.05% of net profit attributable to the parent company; additionally, the company plans to implement a 2024 interim dividend distribution[237][238] Environmental and Social Responsibility Environmental and Social Responsibility The bank actively fulfills its environmental and social responsibilities by promoting green finance with 67.46 billion yuan in green credit, advancing rural revitalization with 240.46 billion yuan in agriculture-related loans, and protecting consumer rights through established mechanisms and financial literacy campaigns, handling 874 consumer complaints during the period - As of June 2024, green credit balance reached 67.46 billion yuan, a net increase of 5.47 billion yuan from the end of the previous year[123][241] - As of June 2024, agriculture-related loan balance reached 240.46 billion yuan[244] - During the reporting period, 3,288 financial literacy promotion activities were conducted, reaching 1.02 million people; a total of 874 consumer complaints were handled[249][250] Significant Matters Significant Matters During the reporting period, the bank and related parties strictly adhered to all commitments made at the time of listing, with no non-operating appropriation of funds by controlling shareholders or related parties, no bankruptcy reorganizations, major lawsuits, arbitrations, or significant penalties, and major related party transactions, primarily credit extensions to major shareholders, were duly approved - The bank and related parties strictly fulfilled all commitments made during the initial public offering, including share lock-up and reduction intentions[254][255] - During the reporting period, the bank was not involved in any major lawsuits, arbitrations, bankruptcy reorganizations, or subject to significant administrative penalties[264][265][266] - Major related party transactions approved during the reporting period primarily involved credit extensions to major shareholders such as Chongqing Yufu Holding Group and Chongqing Urban Construction Investment Group, all of which underwent board or shareholder meeting review procedures[187][189][190] Share Changes and Shareholder Information Share Changes and Shareholder Information During the reporting period, the bank's total share capital remained unchanged at 11.36 billion shares, with 175,010 shareholders at period-end, indicating a dispersed ownership structure with no controlling shareholder or actual controller, and Hong Kong Securities Clearing Company (Nominees) Limited being the largest shareholder representing H-share investors, while A-share major shareholders are local state-owned enterprises in Chongqing - Total share capital remained unchanged during the reporting period at 11,357,000,000 shares[273][275] - As of the end of the reporting period, the total number of shareholders was 175,010[274] - The bank's equity structure is dispersed, with no controlling shareholder or actual controller; the top three A-share shareholders are Chongqing Yufu Capital Operation Group (8.70%), Chongqing Urban Construction Investment Group (7.02%), and Chongqing Development Real Estate Management Co, Ltd (5.19%)[276][282] Financial Report Financial Report This section contains the full 2024 semi-annual financial report prepared under Chinese accounting standards, reviewed by KPMG Huazhen LLP, including consolidated and parent company balance sheets, income statements, cash flow statements, statements of changes in equity, and detailed financial statement notes - This semi-annual financial report has been reviewed by KPMG Huazhen LLP in accordance with Chinese review standards[304][307]