Core Viewpoint - The bank reported a decline in revenue for the first half of 2025, but net profit showed a slight increase, indicating stable profit growth despite challenges in the market [1]. Financial Performance - 1H25 revenue decreased by 5.75% year-on-year, compared to a 4.2% decline in 1Q25 - 1H25 net profit increased by 0.55% year-on-year, compared to a 0.31% increase in 1Q25 - The annualized net interest margin for 2Q25 decreased by 1 basis point to 1.37%, with annualized asset yield down by 12 basis points to 3.19% and interest-bearing liabilities' interest rate down by 12 basis points to 1.87% [1]. Loan and Deposit Growth - Interest-earning assets grew by 6.4% year-on-year in 1H25, with loans increasing by 4.9% - Corporate loans increased by 10.1% year-on-year, while retail loans grew by 0.3% - Total deposits increased by 8.5% year-on-year, with corporate deposits up by 9.4% and retail deposits up by 7.1% [1][2]. Credit Growth Structure - Corporate lending showed strong performance, while retail lending showed signs of recovery - In 1H25, corporate loans in the general government sector grew by 9.1%, manufacturing by 11.6%, and wholesale and retail by 24% - Retail credit recovery was driven by mortgage and consumer loans, with mortgages up by 9.2% and consumer loans up by 7.7% [1]. Non-Interest Income and Asset Quality - Non-interest income decreased by 6.2% year-on-year in 1H25, with fees down by 0.9% - The non-performing loan (NPL) ratio remained stable at 1.25%, with a decrease in the NPL generation rate by 29 basis points to 1.18% - The overdue rate decreased by 7 basis points to 1.95% [3][4]. Industry-Specific NPL Ratios - The NPL ratio for corporate loans decreased by 3 basis points to 1.21%, with manufacturing down by 5 basis points and wholesale and retail down by 50 basis points - The retail NPL ratio increased slightly by 2 basis points to 1.38% - The top three sectors for corporate NPLs are real estate (14.56%), manufacturing (13.67%), and wholesale and retail (8.55%) [4]. Investment Recommendations - The bank's projected price-to-book (PB) ratios for 2025E, 2026E, and 2027E are 0.46X, 0.42X, and 0.40X, respectively - The projected price-to-earnings (PE) ratios for the same years are 5.26X, 5.12X, and 5.05X [5]. Rating - The bank maintains a "Buy" rating [6].

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company has demonstrated strong performance in both deposits and loans, with resilient asset quality [1] - Revenue and net profit for the first quarter of 2025 increased by 5.63% and 5.76% year-on-year, respectively, despite a slight decline compared to 2024 [4] - Interest income continued to grow significantly, supporting stable revenue and profit growth, with a year-on-year increase of 11.59% in net interest income [4][5] - The bank's total assets, loans, and financial investments grew by 17.58%, 20.91%, and 13.66% year-on-year, respectively, indicating improved growth rates compared to 2024 [5] - The bank's non-performing loan ratio remained stable at 0.76%, with a provision coverage ratio of 370.54% [8] - The bank's competitive advantages are highlighted by its focus on the Zhejiang region and its clear market positioning [9] Summary by Sections Financial Performance - For Q1 2025, the bank's revenue and net profit growth rates were 5.63% and 5.76%, respectively, with net interest income accounting for 69.4% of total revenue [4] - The bank's total assets reached approximately 3,125.232 billion, with loans totaling 1,380.363 billion [12] - The projected revenue for 2025 is 71,878 million, with a year-on-year growth of 7.87% [11] Asset Quality - The non-performing loan ratio was stable at 0.76%, and the provision coverage ratio was 370.54%, indicating strong risk management [8] - The bank has shown proactive adjustments in credit and risk control strategies, leading to improvements in forward-looking risk indicators [8] Growth Outlook - The bank is expected to maintain a revenue growth of 7.87% in 2025, with net profit growth projected at 4.61% [11] - The bank's diversified financial services and solid risk control capabilities position it well to benefit from domestic demand and industrial chain shifts [9]