Bank Of Shanghai(SH:601229) Changjiang Securities·2026-03-23 13:44Investment Rating - The investment rating for Shanghai Bank is "Accumulate" [9] Core Views - The governance structure reform of Shanghai Bank is expected to initiate a cycle of efficiency improvement, with a strong dividend capability and willingness, projecting dividend yields of 5.3% and 5.7% for 2025 and 2026 respectively. The current convertible bond balance is approximately 20 billion, with the stock price 15% away from the strong redemption price of the convertible bonds. The projected price-to-book (PB) ratios for 2025 and 2026 are 0.56x and 0.52x, respectively, indicating a low valuation among banks in the Yangtze River Delta region. If the fundamentals improve as expected, there is potential for significant valuation recovery, leading to a long-term positive outlook [2][6][13]. Summary by Sections Financial Performance - In 2025, Shanghai Bank achieved stable growth with a revenue increase of 3.4% year-on-year, and a net profit attributable to shareholders growing by 2.7%. The performance was stable despite a high base of investment income in Q4 2024 [6][12]. - The new management team, which took office in 2025, has outlined strategic plans and goals for the new period, focusing on organizational restructuring and efficiency improvements [6][12]. Credit Growth and Asset Quality - Credit growth is expected to rebound to around 5% in 2026, following a period of structural adjustment and efficiency improvements post-reform. The focus will remain on corporate loans, particularly in key sectors such as municipal projects and state-owned enterprises [13][14]. - The non-performing loan (NPL) ratio was stable at 1.18% at the end of 2025, with a provision coverage ratio of 245%. The bank is accelerating the disposal of existing retail loan risks, with significant write-offs in the first half of 2025 [13][14]. Interest Income and Revenue Growth - The net interest margin is expected to stabilize, supporting interest income growth. The net interest margin for the first half of 2025 was 1.15%, with expectations for further improvement as high-interest deposits mature [13][14]. - Overall revenue growth is projected to recover in 2026, driven by both interest and non-interest income, particularly in wealth management and agency business [13][14]. Valuation and Market Position - The current stock price is 9.65 yuan, with a total share capital of approximately 1.42 billion shares. The price-to-earnings (P/E) ratio is projected to be 5.46 for 2026, indicating a favorable valuation compared to peers [10][27]. - The bank's dividend per share is expected to increase to 0.55 yuan in 2026, with a dividend yield of 5.66% [27].