常熟银行：深度报告：ROE向上前景可期

Investment Rating - The report maintains a "Buy" rating for the company, with a target price of 7.33 CNY and a projected PB of 0.7 times for 2024 [2][3]. Core Views - The report highlights the resilience of the company's ROE, projecting it to reach 14.3% in 2024, supported by strong net interest income and a favorable cost-to-income ratio [1][2][6]. - The company has a robust growth outlook, with expected EPS of 1.41, 1.65, and 1.91 CNY for 2024-2026, indicating significant valuation upside potential [2][3]. Summary by Sections 1. ROE Resilience Factors - The company has achieved a ROE of 13.7% in 2023, ranking sixth among listed banks, with expectations for continued upward momentum [1][6]. - Key factors supporting ROE growth include: - Extensive branch coverage in Jiangsu province, facilitating credit expansion [18][19]. - Stabilization of net interest margin due to a focus on small and micro enterprises, leading to high loan yield [24][25]. - Significant improvement potential in the cost-to-income ratio, with a current ratio of 37% compared to over 55% for newly consolidated village banks [28][29]. - Low credit costs, with a projected credit cost below 1% due to strong asset quality and high provisioning coverage [35][36]. 2. Revenue and Profitability Forecast - The company anticipates steady revenue growth, with operating income projected to reach 13,847 million CNY by 2026, reflecting a growth rate of 12.1% [3]. - Net profit attributable to shareholders is expected to grow to 5,246 million CNY by 2026, with a growth rate of 16.1% [3]. 3. Valuation Analysis - The report indicates that the company's current PB is at historical lows, suggesting room for valuation improvement as earnings remain strong [1][2]. - The projected PB for 2024 is 0.7, with expectations for continued upward valuation support from robust earnings performance [2][3]. 4. Risk Management and Asset Quality - The company maintains a high provisioning coverage ratio of 539%, indicating strong risk management capabilities [35]. - The asset quality remains stable, with non-performing loan ratios well controlled, particularly in the context of expanding credit operations [31][33].