INDUSTRIAL BANK(SH:601166) Minsheng Securities·2024-03-28 16:00Investment Rating - The report maintains a "Recommended" rating for the company [3]. Core Views - The company's revenue growth is showing signs of marginal recovery, with stable net interest margins and rapid expansion contributing to positive growth in net interest income. Although there are pressures from impairment provisions due to risk resolution, the decline in new non-performing loans in key areas suggests potential for improvement in asset quality and profit growth [3][2]. - The company has increased its cash dividend payout ratio steadily since 2019, reaching 28% in 2023. Earnings per share (EPS) forecasts for 2024, 2025, and 2026 are projected at 3.75, 3.85, and 4.03 yuan respectively, with a price-to-book (PB) ratio of 0.4 times for the closing price on March 29, 2024 [3][2]. Summary by Sections Financial Performance - In 2023, the company achieved a total revenue of 210.8 billion yuan, a year-on-year decrease of 5.2%. The net profit attributable to shareholders was 77.1 billion yuan, down 15.6% year-on-year. The non-performing loan ratio stood at 1.07%, with a provision coverage ratio of 245% [2]. - The net interest income increased by 0.8% year-on-year, supported by stable interest margins and high credit expansion. The company reported a significant decline in non-interest income, down 38.4% year-on-year, largely due to a high base effect from 2022 [2][3]. - Other non-interest income grew by 14.1% year-on-year, indicating the company's ability to leverage its strengths in financial markets for investment returns [2]. Asset Quality - The company's asset quality remains stable, with effective risk mitigation in key areas. The non-performing loan ratio remained unchanged from the previous quarter, while the focus on managing risks in real estate and local government financing has shown positive results [2][3]. - The company has increased its impairment provisions significantly, with a 142% year-on-year increase in asset impairment losses in Q4 2023, which has impacted net profit growth. However, as new non-performing loan pressures ease, there is potential for a reduction in impairment provisions, leading to profit release [2][3]. Loan and Deposit Growth - By the end of 2023, the total loan amount increased by 9.6% year-on-year, primarily driven by corporate loans. The average interest rate for newly issued corporate loans was 4.30%, achieving both volume and price advantages [2]. - The cost of interest-bearing liabilities decreased to 2.34% by the end of 2023, reflecting a significant reduction in the interest rate for domestic RMB deposits, which fell by 11 basis points year-on-year [2].