Xin Lang Cai Jing·2025-09-03 08:34Core Viewpoint - The bank reported a decline in revenue for the first half of 2025, but net profit showed a slight increase, indicating stable profit growth despite challenges in the market [1]. Financial Performance - 1H25 revenue decreased by 5.75% year-on-year, compared to a 4.2% decline in 1Q25 - 1H25 net profit increased by 0.55% year-on-year, compared to a 0.31% increase in 1Q25 - The annualized net interest margin for 2Q25 decreased by 1 basis point to 1.37%, with annualized asset yield down by 12 basis points to 3.19% and interest-bearing liabilities' interest rate down by 12 basis points to 1.87% [1]. Loan and Deposit Growth - Interest-earning assets grew by 6.4% year-on-year in 1H25, with loans increasing by 4.9% - Corporate loans increased by 10.1% year-on-year, while retail loans grew by 0.3% - Total deposits increased by 8.5% year-on-year, with corporate deposits up by 9.4% and retail deposits up by 7.1% [1][2]. Credit Growth Structure - Corporate lending showed strong performance, while retail lending showed signs of recovery - In 1H25, corporate loans in the general government sector grew by 9.1%, manufacturing by 11.6%, and wholesale and retail by 24% - Retail credit recovery was driven by mortgage and consumer loans, with mortgages up by 9.2% and consumer loans up by 7.7% [1]. Non-Interest Income and Asset Quality - Non-interest income decreased by 6.2% year-on-year in 1H25, with fees down by 0.9% - The non-performing loan (NPL) ratio remained stable at 1.25%, with a decrease in the NPL generation rate by 29 basis points to 1.18% - The overdue rate decreased by 7 basis points to 1.95% [3][4]. Industry-Specific NPL Ratios - The NPL ratio for corporate loans decreased by 3 basis points to 1.21%, with manufacturing down by 5 basis points and wholesale and retail down by 50 basis points - The retail NPL ratio increased slightly by 2 basis points to 1.38% - The top three sectors for corporate NPLs are real estate (14.56%), manufacturing (13.67%), and wholesale and retail (8.55%) [4]. Investment Recommendations - The bank's projected price-to-book (PB) ratios for 2025E, 2026E, and 2027E are 0.46X, 0.42X, and 0.40X, respectively - The projected price-to-earnings (PE) ratios for the same years are 5.26X, 5.12X, and 5.05X [5]. Rating - The bank maintains a "Buy" rating [6].