Bank Of Shanghai(SH:601229) HTSC·2025-08-29 04:54Investment Rating - The report maintains a "Buy" rating for Shanghai Bank with a target price of RMB 12.02 [7][5]. Core Views - Shanghai Bank's performance shows steady growth with a year-on-year increase in net profit and operating income of 2.0% and 4.2% respectively for the first half of 2025 [1]. - The bank's non-interest income growth has rebounded, and the dividend payout ratio has increased, indicating a positive outlook for the second half of the year [1][5]. - The report highlights the importance of monitoring credit disbursement progress and non-performing asset management in the upcoming months [1]. Summary by Sections Financial Performance - For the first half of 2025, the annualized ROE and ROA were 11.00% and 0.81%, reflecting a slight decrease of 0.50 percentage points and 0.01 percentage points year-on-year respectively [1]. - Non-interest income grew by 8.1% year-on-year, with other non-interest income increasing by 12.1%, primarily due to improved investment returns and reduced fair value losses [3]. - The bank's net interest margin for the first half of 2025 was 1.15%, showing a stabilization in the decline compared to the previous year [2]. Asset Quality - As of June 2025, the non-performing loan (NPL) ratio was stable at 1.18%, with a provision coverage ratio of 244% [4]. - The annualized NPL generation rate for the first half of 2025 was 1.33%, indicating a slight increase from the previous year [4]. Valuation and Forecast - The report forecasts net profits for 2025-2027 to be RMB 242 billion, RMB 253 billion, and RMB 268 billion respectively, with year-on-year growth rates of 2.8%, 4.6%, and 5.9% [5]. - The target price of RMB 12.02 corresponds to a price-to-book (PB) ratio of 0.68 for 2025, reflecting an upward adjustment from the previous estimate of 0.67 [5].