信贷增长修复，资产质量继续改善

Investment Rating - The report maintains a "Buy" rating for Huaxia Bank with a target price of 7.52 CNY per share, compared to the current price of 6.72 CNY [4]. Core Views - Huaxia Bank's 2023 annual report and 2024 Q1 report show a revenue growth rate of -0.6% and -4.3% respectively, while the profit before provisions (PPOP) growth rates are -5.6% and -8.6%. However, the net profit attributable to shareholders increased by 5.3% and 0.6% year-on-year, indicating a gradual clearing of historical burdens [2][3]. - Key highlights include a significant decline in net interest income in Q1, but provisions and other non-interest income growth helped maintain positive performance. The net interest income decreased by 9.3% year-on-year in Q1, while other non-interest income grew by 33.5% [2]. - Asset quality continues to improve, with a non-performing loan (NPL) ratio of 1.66% as of March, down 1 basis point from December. The provision coverage ratio increased to 161% [2][3]. Summary by Sections Financial Performance - Revenue growth rates for 2023 and 2024 Q1 were -0.6% and -4.3%, respectively. PPOP growth rates were -5.6% and -8.6%. The net profit attributable to shareholders grew by 5.3% and 0.6% year-on-year [2][3]. - In Q1, net interest income saw a significant decline, while other non-interest income increased, contributing to overall positive performance despite revenue challenges [2]. Asset Quality - The NPL ratio improved to 1.66% as of March, with a provision coverage ratio of 161%. The new NPL generation rate decreased to 0.98%, down 21 basis points year-on-year [2][3]. - The bank's NPL balance decreased by 1.8 billion CNY in the second half of 2023, with notable improvements in the manufacturing sector [2]. Credit Growth - Credit growth in Q1 2024 was 999 million CNY, an increase of 198 million CNY year-on-year, surpassing the full-year growth of 1.6% in 2023 [2][3]. Profitability Forecast - The forecast for net profit growth is 1.3% for 2024 and 3.0% for 2025, with expected earnings per share (EPS) of 1.62 CNY and 1.67 CNY, respectively. The current price corresponds to a price-to-earnings (PE) ratio of 4.2X for 2023 and 4.0X for 2024 [3].