1. Report Investment Rating - No investment rating for the industry is provided in the report. 2. Core Viewpoints - The report argues that China Minsheng Bank's existing non - performing assets are basically resolved, its fundamentals are improving, and the market may have overestimated its credit risk. The investment value of its Tier 2 and perpetual bonds is relatively high, with significant potential for yield decline and prominent cost - effectiveness [1][2]. 3. Summary by Directory 3.1 Equity Structure and Corporate Governance - **Stable Equity Structure and Controllable Related - Party Loan Risks**: As of Q1 2025, Minsheng Bank's total assets reached 7.78 trillion yuan, and it is one of the 20 system - important banks in China in 2023. The top shareholder is Dajia Life Insurance, and the shareholding of private enterprises is relatively dispersed. As of the end of 2024, related - party loans accounted for only 1.64% of the total loans, meeting regulatory requirements [2][6][7]. - **Reasonable Board and Management Structure**: In 2024, there were significant personnel changes in the board of directors and management. Most executives were promoted internally, and a few were from large state - owned banks. The board structure is reasonable, with diversified members and high operational independence. Private shareholders have weak influence on bank operations [14][15][16]. 3.2 Asset Scale and Structure - **Large Asset Scale and Main Investment in Loans and Bonds**: From 2020 - 2024, the average annual compound growth rate of Minsheng Bank's assets was 2.98%. As of the end of 2024, its total assets were 7.81 trillion yuan, the largest among banks in the first group of system - important banks. Loans and financial investments accounted for over 80% of total assets [19][26]. - **Steady Loan Growth and Industry Structure Optimization**: From 2017 - 2024, the average annual compound growth rate of loans was 7.04%. As of Q1 2025, loans accounted for 57.36% of total assets. The proportion of real estate loans has been decreasing, while that of infrastructure - related industries has been increasing. As of the end of 2024, the loans of the top ten borrowing customers accounted for 1.72% of the total loans, indicating a low loan concentration [28][34][41]. - **Government Bond - Based Financial Investments with Low Credit Risk**: As of the end of 2024, financial investments accounted for 30.69% of total assets, with bond investments accounting for about 89.42%. Government bonds accounted for 63.82%, and the credit risk of the investment portfolio was low [45][49]. 3.3 Non - Performing Asset Disposal and Asset Quality - **Resolution of Existing Non - Performing Assets**: From 2020 - 2022, Minsheng Bank cleared and disposed of over 300 billion yuan of non - performing and potentially risky assets. As of the end of 2024, the non - performing loan rate, non - performing loan generation rate, and migration rate of normal and special - mention loans had declined for four consecutive years [52][71]. - **Improvement in Asset Quality Indicators**: The non - performing loan generation rate decreased from 3.63% at the end of 2020 to 1.49% at the end of 2024. The non - performing loan rate at the end of 2024 was 1.47%. Although the overdue loan rate and the proportion of restructured loans increased in 2024, the overall asset quality is improving [71][72][75]. 3.4 Liability Structure and Operating Performance - **Optimized Liability Structure and Good Liquidity Indicators**: From 2022 - 2024, the proportion of deposits in liabilities was about 60%. The reliance on inter - bank liabilities decreased, while the scale of bonds payable increased. As of the end of 2024, liquidity regulatory indicators met regulatory requirements, and capital adequacy indicators remained stable [80][85][90]. - **Potential Turnaround in Operating Performance**: From 2020 - 2024, operating income and net profit declined. However, in Q1 2025, the revenue growth rate was high. The net interest margin in 2024 was at a low level in the industry, but with the downward adjustment of deposit rates, the net interest margin is expected to stabilize [98][103][114]. 3.5 Investment Value of Minsheng Bank's Capital Bonds - **Fundamental Improvement and Potential Performance Growth**: Existing non - performing assets are basically resolved, and based on assumptions such as loan industry structure optimization and improved asset quality, Minsheng Bank's performance is expected to improve slightly in the next three years [120][122]. - **Low Credit Risk of Capital Bonds**: Minsheng Bank's existing capital tools amount to 175 billion yuan, with normal interest payments and all previous capital tools actively redeemed at maturity. The yields of its Tier 2 and perpetual bonds are higher than the industry average, but the market may have overestimated its credit risk. The bonds have low credit risk due to factors such as high trigger thresholds for write - down or conversion and the bank's safety - rated central bank financial institution rating [123][124][128].