CZBANK(SH:601916) ZHESHANG SECURITIES·2025-05-05 15:40Investment Rating - The investment rating for the company is "Buy" [8] Core Views - The company's Q1 2025 report indicates a rebound in net interest margin and a stable performance in non-performing loans, supported by a reduction in impairment losses [1][2][3] Summary by Relevant Sections Performance Overview - In Q1 2025, the company's revenue decreased by 7.1% year-on-year, a decline of 13.3 percentage points compared to 2024 annual results. The net profit attributable to the parent company increased by 0.6% year-on-year, a slight decline of 0.3 percentage points from 2024 annual results. The non-performing loan ratio remained stable at 1.38%, while the provision coverage ratio decreased by 7 percentage points to 171% [2][5] Profit Support from Provisions - The Q1 2025 revenue decline of 7.1% year-on-year was driven by a combination of improved net interest margin, negative impacts from non-interest income, and a significant reduction in impairment losses. The net interest margin for Q1 2025 was 1.61%, an increase of 30 basis points from Q4 2024, with a year-on-year decline narrowing by 35 basis points. Non-interest income saw a year-on-year decline of 24.9%, while impairment losses decreased by 20.4% compared to the previous year [3][4] Interest Margin Recovery - The net interest margin for Q1 2025 was 1.61%, reflecting a 30 basis point increase from Q4 2024. This improvement was attributed to a rise in asset yield by 13 basis points to 3.63% and a decrease in liability cost by 19 basis points to 1.94% [4] Non-Performing Loan Performance - The non-performing loan ratio remained stable at 1.38% at the end of Q1 2025. The generation rate of non-performing loans decreased by 15 basis points compared to the first half of 2024, indicating a need to monitor future pressures on new non-performing loans [5] Earnings Forecast and Valuation - The forecast for net profit attributable to the parent company is expected to grow by 0.60% in 2025, 0.95% in 2026, and 1.43% in 2027. The target price is set at 3.95 CNY per share, corresponding to a price-to-book ratio of 0.60 for 2025, indicating a potential upside of 32% from the current price of 2.99 CNY per share [6]