QILU BANK(601665) 兴业证券·2024-08-16 10:08Investment Rating - The report assigns an "Accumulate" rating to Qilu Bank [2] Core Views - Qilu Bank has a strong local presence and is actively expanding its branch network, focusing on county-level financial services to drive growth [2][3] - The bank's asset quality is improving, with a declining non-performing loan ratio and increasing provision coverage [3][4] - The bank's performance has been robust, with revenue and net profit growth outpacing industry averages, and it is expected to maintain this trend in the coming years [3][4] Summary by Sections Historical Development - Qilu Bank, established in 1996, has evolved into a partner bank for small and medium-sized enterprises, focusing on serving local economies and adapting to national strategic initiatives [7][8] Regional Distribution - The bank has a comprehensive coverage in Shandong province with 188 branches, and it is expanding its presence in other regions, including Tianjin [9][12] - As of 2023, 44% of its loans are directed towards Jinan, with a growing market share in the province [9][11] Economic Context - Shandong province's GDP reached 9.2 trillion yuan in 2023, maintaining its position as the third-largest in China, with a growth rate of 6% [15][16] - The province is undergoing a transformation towards new economic drivers, which is beneficial for local banks like Qilu [15][20] Growth Strategy - Qilu Bank is focusing on expanding its loan portfolio, particularly in public infrastructure and retail sectors, while enhancing its county-level financial services [3][4] - The bank's strategy aligns with local government initiatives, supporting infrastructure and manufacturing upgrades [3][4] Asset Quality - The bank's non-performing loan ratio has decreased to 1.25% as of Q1 2024, with a provision coverage ratio of 305%, indicating strong asset quality management [3][4] Performance Outlook - The bank's revenue and net profit growth rates are projected to be 5.2% and 15.2% respectively from 2024 to 2026, with earnings per share expected to rise steadily [3][4]