HZBank(600926)2024-10-14 14:30Investment Rating - The investment rating for Bank of Hangzhou Co Ltd is Equal-weight with a price target of Rmb13.20 [1][3]. Core Insights - The report indicates significant local economic advantages for Bank of Hangzhou, but notes that the transition to retail banking may take time [2]. - Earnings forecasts have been revised down due to the impact of mortgage rate cuts and LPR cuts on the bank's net interest margin (NIM), which is projected to be 1.4% for 2024 [1][5]. - Loan growth forecasts have been raised to 15.3% for 2024, reflecting the bank's rapid expansion in the first half of 2024 [1]. - The report anticipates an increase in the non-performing loan (NPL) formation ratio to 0.50% in 2024, with a corresponding NPL ratio forecast of 0.78% [1]. Summary by Sections Earnings Forecasts - The net profit growth forecasts have been revised down to 10.6% for 2024, 6.3% for 2025, and 10.9% for 2026 [1]. - The earnings per share (EPS) estimates have been slightly revised up for 2024 by 0.51%, while estimates for 2025 and 2026 have been revised down by 3.49% and 3.39% respectively [1]. Key Earnings Inputs - The net interest margin is projected to decrease from 1.50% in 2023 to 1.40% in 2024, and further to 1.38% in 2025 and 1.41% in 2026 [5][6]. - Total asset growth is expected to decline from 13.9% in 2023 to 11.8% in 2024 [5]. - Credit costs are anticipated to rise from 0.72% in 2023 to 0.94% in 2024 [5]. Risk Reward Analysis - The report highlights a low-risk strategy focusing on corporate and retail loans with high asset quality [3]. - It notes that the bank faces competition from major national banks, which could impact its funding costs and NIM [3].