Bank Of Shanghai(SH:601229) ZHESHANG SECURITIES·2025-10-31 11:52Investment Rating - The investment rating for Shanghai Bank is "Buy" (maintained) [9] Core Views - Shanghai Bank demonstrates steady growth in performance, with an increase in net interest margin quarter-on-quarter, and state-owned capital increase reflects long-term development recognition [1][3] - The bank's revenue and net profit for the first three quarters of 2025 grew by 4.0% and 2.8% year-on-year, respectively, with the growth rate of revenue slightly declining compared to the first half of 2025 [2][3] - The non-performing loan ratio remained stable at 1.18% as of the end of Q3 2025, while the provision coverage ratio improved by 11 percentage points to 255% [5] Summary by Sections Performance Overview - For Q1-Q3 2025, Shanghai Bank's revenue and net profit increased by 4.0% and 2.8% year-on-year, with the growth rates showing a slight decline and improvement compared to H1 2025 [2][3] - Key drivers included a decrease in the effective tax rate to 14.3% and a rise in other non-interest income by 14.7% year-on-year, attributed to a low base in Q3 2024 and realization of bond investment gains [3] - However, asset impairment losses increased by 11.1% year-on-year, and the growth of interest-earning assets slowed, with a year-on-year increase of 2.2% as of Q3 2025 [3] Net Interest Margin - The net interest margin for Q3 2025 rose by 7 basis points to 1.17%, primarily due to improved funding costs [4] - The asset yield decreased by 2 basis points to 2.73%, influenced by lower new loan rates and market interest rates, while the cost of liabilities fell by 10 basis points to 1.55% [4] Asset Quality - The non-performing loan ratio remained stable at 1.18%, with the attention loan ratio increasing by 4 basis points to 2.08% [5] - The provision coverage ratio improved by 11 percentage points to 255% as of Q3 2025 [5] Shareholding Changes - The largest shareholder, Shanghai United (controlled by Shanghai State-owned Assets Supervision and Administration Commission), increased its stake by 6.97 million shares, indicating confidence in the bank's future [6] Earnings Forecast and Valuation - The forecast for net profit attributable to shareholders for 2025-2027 is expected to grow by 3.12%, 4.29%, and 4.95%, respectively, with corresponding book values per share of 16.96, 18.46, and 19.72 yuan [7] - The target price is set at 14.22 yuan per share, corresponding to a price-to-book ratio of 0.84 for 2025, indicating a potential upside of 51% from the current price [7]