常熟银行（601128）：信贷量价边际改善

Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of RMB 8.53 [1]. Core Insights - The company reported a year-on-year increase in net profit and operating income of 12.8% and 8.2% respectively for the first nine months of 2025, showing improvement compared to the first half of the year [1]. - The company has seen a recovery in credit issuance, with a net interest margin stabilizing and asset quality remaining robust, although there are concerns regarding the trend of non-performing loans in the small and micro-enterprise sector [1][4]. - Significant increases in shareholding by state-owned and insurance capital investors indicate strong long-term investment confidence in the company [4]. Summary by Sections Financial Performance - For the first three quarters of 2025, the annualized ROE and ROA were 15.02% and 1.24%, respectively, reflecting slight increases [1]. - As of September 2025, total assets, loans, and deposits grew by 10.9%, 7.1%, and 9.8% respectively compared to June 2025 [2]. Credit and Interest Income - The company added RMB 5.3 billion in new credit in Q3 2025, with retail, corporate, and bills accounting for 31%, 57%, and 12% of the total respectively [2]. - The net interest margin slightly decreased by 1 basis point to 2.57%, while the yield on interest-earning assets increased by 1 basis point to 4.42% [2]. Non-Interest Income and Capital - Non-interest income growth slowed to 20.0% year-on-year, with a notable increase in middle-income revenue [3]. - The capital adequacy ratio and core tier 1 capital ratio were 13.66% and 11.14% respectively as of September 2025, showing a slight improvement from June 2025 [3]. Asset Quality - The non-performing loan ratio remained stable at 0.76%, while the provision coverage ratio decreased by 27 percentage points to 463% [4]. - The annualized credit cost for Q3 2025 was 0.37%, a decrease of 14 basis points year-on-year [4]. Valuation and Forecast - The company is projected to achieve net profits of RMB 43 billion, RMB 48 billion, and RMB 54 billion for 2025 to 2027, with respective growth rates of 11.7%, 11.7%, and 12.5% [5]. - The target price corresponds to a price-to-book ratio of 0.90 for 2025, reflecting a premium valuation due to the company's mature small and micro-business model and increased dividend capacity [5].