CZBANK(601916) Guotai Junan Securities·2024-10-31 17:36Investment Rating - The report maintains a "Buy" rating for Zhejiang Commercial Bank (601916) with a target price of 3.51 RMB, up from the previous target of 3.25 RMB [4] Core Views - Zhejiang Commercial Bank's Q3 2024 performance met expectations, with slowing scale expansion, stabilizing net interest margin, and overall stable asset quality [2] - The bank's revenue growth slowed, but other non-interest income supported performance, with Q3 revenue up 4.5% YoY [2] - Net interest margin showed signs of stabilization, with a cumulative net interest margin of 1.82% for the first three quarters of 2024, down only 2bp from the first half [2] - Asset quality remained stable, with a non-performing loan ratio of 1.43% at the end of Q3 2024, unchanged from Q2 [2] Financial Performance - Total assets grew 10.8% YoY to 3.25 trillion RMB by Q3 2024, with loans increasing 7.6% YoY [2] - Net profit attributable to parent company declined 2.1% YoY in Q3 2024, mainly due to increased impairment losses of 6.53 billion RMB, up 13.5% YoY [2] - The bank's ROAE is expected to remain stable at around 8.5% from 2024 to 2026 [3] - EPS forecasts for 2024-2026 are adjusted to 0.55, 0.56, and 0.58 RMB respectively [2] Industry Comparison - Among comparable banks, Zhejiang Commercial Bank has a relatively low P/B ratio of 0.48 for 2023 and 0.46 for 2024 [10] - The bank's P/E ratio is expected to decrease from 5.18 in 2023 to 4.93 in 2026 [3] - Compared to industry peers, Zhejiang Commercial Bank has a lower valuation multiple but maintains stable profitability metrics [10] Future Outlook - The bank faces continued pressure on net interest margin due to LPR cuts and adjustments to existing mortgage rates [2] - Revenue and profit growth are expected to further narrow due to slowing scale expansion and non-interest income growth [2] - The bank's capital adequacy ratio is projected to improve from 12.2% in 2023 to 12.7% in 2024 [9]