ZHESHANG SECURITIES·2025-05-05 15:40Investment Rating - The investment rating for the report on Bank of China is "Buy" [5] Core Insights - Bank of China reported a revenue growth of 2.6% year-on-year in Q1 2025, which is better than expected, while profit decreased by 2.9% year-on-year [2][5] - The bank's non-performing loan (NPL) ratio remained stable at 1.25% at the end of Q1 2025, with a provision coverage ratio of 198%, down 3 percentage points from the end of 2024 [4][5] - The report anticipates a net profit growth of 1.07%/6.26%/5.93% for the years 2025-2027, with a target price of 6.40 CNY per share, indicating a potential upside of 16% from the current price [5] Summary by Sections Revenue Performance - In Q1 2025, Bank of China's revenue increased by 2.6% year-on-year, which is an improvement of 1.4 percentage points compared to 2024 [2] - The average net interest margin for Q1 2025 was 1.29%, a decrease of 11 basis points from Q4 2024 and 15 basis points from Q1 2024 [3] Profitability - The bank's profit for Q1 2025 decreased by 2.9% year-on-year, attributed to a 23.3% increase in income tax compared to the previous year [2][5] - Non-interest income showed a positive trend, with a 2.1% year-on-year increase in fee income and a significant 669% increase in foreign exchange gains [2] Asset Quality - The NPL generation rate increased by 7 basis points to 0.49% in Q1 2025, indicating a slight rise in new non-performing loans, but overall risk performance remains stable [4] - The provision coverage ratio at the end of Q1 2025 was 198%, reflecting a decrease of 3 percentage points from the end of 2024 [4] Forecast and Valuation - The forecast for Bank of China's net profit for 2025-2027 is 240.39 billion CNY, 255.43 billion CNY, and 270.57 billion CNY respectively, with corresponding book values per share of 8.49 CNY, 9.01 CNY, and 9.56 CNY [5][12] - The target valuation for 2025 is set at a price-to-book ratio of 0.75x, leading to a target price of 6.40 CNY per share [5]