Guotou Securities·2025-05-05 15:35Investment Rating - The investment rating for the company is "Buy-A" with a target price of 55 CNY, maintaining the rating [4][13]. Core Views - The company's Q1 2025 performance shows a reliance on scale expansion for profit growth, while net interest margin has narrowed and non-interest income growth has slowed [1][12]. - The bank's deposit advantage has strengthened, with a significant increase in interest-bearing liabilities and deposits, supporting future asset expansion [2][12]. - The outlook for net interest margin remains under pressure due to weak effective financing demand, but the bank's strong deposit base is expected to maintain a relatively high level compared to the industry [8][12]. Summary by Sections Financial Performance - In Q1 2025, the company's revenue decreased by 3.09% year-on-year, while net profit attributable to shareholders grew by 2.08% [1]. - The average daily balance of interest-earning assets increased by 8.7% year-on-year, with new interest-earning assets added amounting to 176.6 billion CNY, a year-on-year increase of 8.4 billion CNY [1][18]. Loan and Deposit Structure - New corporate loans grew rapidly, primarily directed towards manufacturing, IT transmission, construction, and public utilities, while retail loan issuance remained weak [2][12]. - The average daily balance of interest-bearing liabilities increased by 8.6% year-on-year, with deposits growing at a rate of 9.4%, significantly outpacing loan growth of 5.2% [2][12]. Net Interest Margin - The net interest margin for Q1 2025 was 1.91%, down 11 basis points year-on-year, primarily due to a decrease in asset yield [3][8]. - The yield on interest-earning assets decreased to 3.21%, with loan yield dropping by 17 basis points [3][8]. Non-Interest Income - Non-interest income from fees and commissions decreased by 2.51% year-on-year, with wealth management income growing by 10.45% [8][12]. - Other non-interest income faced pressure, declining by 22.2% year-on-year due to rising market interest rates affecting bond and fund investments [9][12]. Asset Quality - The bank's non-performing loan ratio slightly decreased to 0.94%, indicating stable asset quality, while the coverage ratio remained robust at around 410% [9][12]. - The non-performing loan generation rate for Q1 2025 was 1%, showing a year-on-year decline of 3 basis points [10][12]. Future Outlook - The bank anticipates a modest revenue growth of 0.61% and a net profit growth of 1.24% for 2025, with expectations of a recovery in the capital market supporting its performance [13][14].