Ge Long Hui·2025-11-01 13:13Core Insights - The performance of Zhejiang Commercial Bank in Q3 2025 is generally in line with expectations, with cumulative operating income and net profit attributable to shareholders declining by 6.8% and 9.6% year-on-year respectively [1][2] Financial Performance - Cumulative operating income and net profit for the first three quarters of 2025 decreased by 6.8% and 9.6% year-on-year, while Q3 2025 saw a single-quarter operating income and net profit decline of 8.9% and 18.4% respectively [1] - The net interest margin for Q3 2025 was 1.56%, a year-on-year decrease of 10 basis points, with the decline narrowing compared to the 17 basis points drop in Q2 [1] - The cost of liabilities improved, with a year-on-year decrease of 37 basis points to 1.8%, while the yield on interest-earning assets fell by 45 basis points to 3.46% [1] - Non-interest income decreased by 18.5% year-on-year in Q3 2025, with net fees down 33.6% and other non-interest income down 14.1%, impacting revenue by 2 percentage points and 3 percentage points respectively [1] Asset Quality - The non-performing loan ratio at the end of Q3 2025 was 1.36%, unchanged from the end of Q2, with a cumulative non-performing loan generation rate of 1.5% for the first three quarters, down 17 basis points year-on-year [2] - The credit cost decreased by 10 basis points year-on-year to 0.71%, supporting net profit [2] - The provision coverage ratio at the end of Q3 2025 was 159.56%, a decrease of 10 percentage points from the end of Q2 [2] Capital Adequacy - The core capital adequacy ratio and total capital adequacy ratio at the end of Q3 2025 were 8.4% and 12.15% respectively, with a 1 basis point increase and a 16 basis point decrease from the previous quarter [2] Profit Forecast and Valuation - The profit forecast and outperform industry rating remain unchanged, with the A-share trading at 0.40x P/B for 2025E/2026E and a target price of 3.55 yuan, indicating a 17.6% upside [2] - The H-share is trading at 0.28x P/B for 2025E/2026E, with a target price of 3.01 HKD, reflecting a 14.4% upside [2]