AGRICULTURAL BANK OF CHINA(601288) 中泰证券·2024-09-03 06:03Investment Rating - The report maintains an "Overweight" rating for Agricultural Bank of China (ABC) with 2024E, 2025E, and 2026E PB ratios of 0.64X, 0.59X, and 0.55X respectively [3][52] Core Views - ABC's 2024 H1 revenue increased by 0.2% YoY, turning positive from -1.9% in Q1 2024, while net profit grew by 2.0% YoY, up from -1.6% in Q1 2024 [1][63] - Net interest income rose by 0.1% YoY, driven by stabilized net interest margin (NIM), while non-interest income increased by 0.6% YoY, with fee income declining at a slower pace and other non-interest income showing significant growth [1][63] - The bank's asset quality remained stable, with a non-performing loan (NPL) ratio of 1.32% in H1 2024, unchanged from Q1 2024 [47][49] Financial Performance - ABC's H1 2024 net interest margin (NIM) increased by 1bp to 1.45% compared to Q1 2024, with asset yield declining by 11bp to 3.08% and liability cost decreasing by 10bp to 1.83% [10] - The bank's net fee income declined by 7.9% YoY in H1 2024, an improvement from the 10.8% decline in Q1 2024, while other non-interest income surged by 20.8% YoY, up from 11.2% in Q1 2024 [46][63] - ABC's H1 2024 net profit growth was primarily driven by revenue recovery and lower management expense growth [1][63] Asset and Liability Structure - ABC's loan growth slowed in Q2 2024, with total loans increasing by RMB 526.48 billion, down by RMB 83.08 billion YoY [11][13] - Corporate loans grew by RMB 148.33 billion in Q2 2024, down by RMB 363.34 billion YoY, while retail loans increased by RMB 49.38 billion, down by RMB 24.23 billion YoY [11][13] - The bank's deposit growth slowed significantly, with Q2 2024 deposits declining by 5.3% QoQ and decreasing by RMB 1.6 trillion, down by RMB 2.2 trillion YoY [40][43] Asset Quality - ABC's NPL ratio remained stable at 1.32% in H1 2024, with a quarterly annualized NPL formation rate of 0.55%, up by 5bp QoQ [47][49] - The bank's overdue loan ratio stood at 1.07% in H1 2024, down by 1bp from the beginning of the year, while the overdue 90+ days ratio increased by 7.9 percentage points to 52.31% [21][49] - ABC's provision coverage ratio rose slightly to 303.94% in Q2 2024, up by 0.72 percentage points QoQ [21][49] Capital Position - ABC's capital adequacy ratio improved in Q2 2024, with core tier 1 capital adequacy ratio, tier 1 capital adequacy ratio, and total capital adequacy ratio standing at 11.13%, 13.76%, and 18.45% respectively, with changes of -24bp, -1bp, and +5bp QoQ [50] Industry and Market Context - The report highlights ABC's strong fundamentals, including cheap valuation, high dividend yield, excellent asset-liability management, and steady profitability, with ongoing resolution of legacy risks and improving asset quality [3][52]