Investment Rating - The report gives a "Buy" rating for Huishang Bank with a target price of HKD 4.17 [11][5]. Core Views - Huishang Bank has shown stable performance with a year-on-year increase in revenue and net profit, indicating a solid return on assets and equity [2][20]. - The bank is the only city commercial bank in Anhui province, achieving full coverage of the provincial cities, which provides significant growth potential [3][30]. - The bank's loan and deposit volumes have steadily increased, although net interest margins have slightly narrowed [4][19]. - Investment income has grown rapidly, while non-interest income has seen a slight decline [4][19]. - The asset quality continues to improve, with a low non-performing loan ratio and a high capital adequacy ratio [5][19]. Summary by Sections 1. Performance and Coverage - Huishang Bank was established in 1997 and has merged with several local banks, achieving a market presence in Anhui province with 487 branches, 87.9% of which are located within the province [2][17]. - As of 1H25, the bank's total assets reached CNY 2.25 trillion, with a year-on-year growth of 11.82% [19][26]. 2. Loan and Deposit Growth - The total loan portfolio reached CNY 1.10 trillion, growing by 15.28% year-on-year, with corporate loans at CNY 780.46 billion and personal loans at CNY 320.08 billion [4][19]. - Total deposits amounted to CNY 1.28 trillion, reflecting an 11.76% year-on-year increase [4][19]. 3. Interest Margin and Income - The net interest margin for 1H25 was 1.55%, a decrease of 0.16 percentage points from the previous year [4][19]. - Investment income grew by 12.52% year-on-year to CNY 45.26 billion, while fee and commission income slightly declined by 0.4% [4][19]. 4. Asset Quality and Capital Adequacy - The non-performing loan ratio stood at 0.98%, with a provision coverage ratio of 289.94% as of 1H25 [5][19]. - The core tier 1 capital adequacy ratio was 9.53%, indicating a strong capital position [5][19]. 5. Financial Projections - Revenue projections for 2025 to 2027 are CNY 380.44 billion, CNY 394.60 billion, and CNY 411.49 billion, respectively, with net profit estimates of CNY 163.10 billion, CNY 171.73 billion, and CNY 181.95 billion [5][6].
徽商银行（03698）：深度报告：竞争格局好，发展潜力大