Investment Rating - The report maintains a "Buy" rating for Qilu Bank [8] Core Views - Qilu Bank's revenue growth for the first half of 2025 is 5.8% year-on-year, with a net profit growth of 16.48% [2][6] - The bank's asset quality is improving, with a non-performing loan ratio decreasing to 1.09% and a provision coverage ratio increasing to 343% [2][6] - The bank's long-term growth potential is clear, with strong performance and improving asset quality [2][12] - The stock price has been under pressure due to convertible bond conversions, but the valuation is expected to recover post-conversion [2][12] Summary by Sections Financial Performance - Revenue growth of 5.8% in H1 2025, with Q1 at 4.7% and Q2 at 6.7% [2][6] - Net profit growth of 16.48%, with Q1 at 16.47% and a non-recurring net profit growth of 17.1% [2][6] - Interest income increased by 13.6%, with Q2 showing a significant rise of 19.1% [12] Asset Quality - Non-performing loan ratio decreased by 8 basis points to 1.09% [2][6] - Provision coverage ratio improved by 19 percentage points to 343% [2][6] - Continuous improvement in asset quality indicators over the past seven years [12] Market Position and Valuation - Current valuation at 0.77x 2025 PB and 6.9x 2025 PE, indicating potential for high elasticity recovery post-conversion [2][12] - The bank is expanding its branch network, supporting high loan growth [12] Future Outlook - The bank is expected to maintain high loan growth rates, driven by its focus on corporate lending [12] - The capital strength is projected to improve significantly post-conversion of convertible bonds, with a core Tier 1 capital adequacy ratio expected to reach 12% by the end of 2025 [12]