Xin Lang Cai Jing·2025-04-30 08:37Core Viewpoint - Zhejiang Merchants Bank reported a 1Q25 performance with a year-on-year decline in operating income of 7.1% and a slight increase in net profit attributable to shareholders of 0.6%, aligning with expectations [1] Financial Performance - In 1Q25, net interest income increased by 1.4% year-on-year, primarily due to effective control of deposit costs, which supported a rebound in net interest margin [2] - The net interest margin for 1Q25 was 1.60%, with a year-on-year decrease of 8 basis points and a quarter-on-quarter increase of 29 basis points [2] - Interest-earning asset yield decreased by 50 basis points year-on-year to 3.60%, while the cost of interest-bearing liabilities fell by 42 basis points to 1.93% [2] - The bank maintained a steady expansion of interest-earning assets, which grew by 8.9% year-on-year and 3.5% quarter-on-quarter, with total loans increasing by 6.9% year-on-year [2] Non-Interest Income - Other non-interest income saw a significant decline of 24.9% year-on-year in 1Q25, attributed to a high base in 1Q24 and rising bond rates [3] - Net fee income decreased by 13.2% year-on-year, contributing to an overall decline in non-interest income of 22.2% [3] Asset Quality - The non-performing loan ratio slightly increased by 6 basis points to 1.44% in 1Q25, while the net non-performing loan generation rate decreased by 20 basis points to 1.32% [3] - The provision coverage ratio fell by 7.46 percentage points to 171.21% [3] Profit Forecast and Valuation - The profit forecast remains unchanged, with the A-shares trading at 0.4x P/B for 2025E and 2026E, maintaining a target price of 3.55 yuan, indicating a 17.5% upside [4] - The H-shares are trading at 0.4x P/B for 2025E and 0.3x for 2026E, with a target price of 3.01 HKD, reflecting a 15.3% upside [4]