Zhongtai: Dividend attributes highlighted, pay attention to the investment value of bank stocks.

Zhongtai released a research report stating that the dividend attribute is highlighted, focusing on the investment value of bank stocks. The calculation shows a slight decrease of 1.7 percentage points in first-quarter revenue, similar to the decline in 24; the full-year dimension is expected to be consistent with the 24-year trend, and the decline will gradually converge. The traditional interest rate spread pressure in 25 is less than in 24. However, there will be significant differentiation in non-interest income among banks in 25. There is a relatively high probability of a slight improvement in revenue for the whole year, with the core still being seasonal factors affecting loan repricing. Under the condition of slightly negative revenue, asset quality overall remains stable, and the industry's ability to release profit through provisions is still strong. It is expected that the industry will still have a slight positive profit for the whole year, with a calculated year-on-year increase of 0.2% in the first quarter; the pace will follow the trend of revenue improvement and gradually improve throughout the year. Key points: 1. The industry's first-quarter revenue is expected to be -1.7%, a small negative growth; it is basically flat compared to the same period last year. Net profit is expected to be +0.2%; under a backdrop of stable asset quality, provisions have the ability to release profits. 2. Scale: Total asset growth is bottoming out and rebounding; credit growth is stable, and regional differentiation continues. 3. Net interest margin: The industry's first-quarter net interest margin is expected to decrease slightly by 4-5 basis points month-on-month, mainly due to the repricing effect brought by the decline in the 24 LPR. 4. Non-interest income: fee pressures have eased slightly; other non-interest incomes are under pressure. 5. Asset quality: corporate time-space exchange; retail small-scale diversification; overall healthy. It is expected that the year-on-year decrease in net interest income in the first quarter will be -1.4%, smaller than the same period last year (1Q24 year-on-year -3%); the narrowing year-on-year decrease in interest margin is the core support, with an increase in the proportion of repricing of deposits due for renewal compared to previous years. By sector, it is still city commercial banks > rural commercial banks > large banks > joint-stock banks. The amount of growth remains a very important driving factor for city commercial banks; and the proportion of medium and small banks with loans linked to five-year periods is lower than that of national joint-stock banks, making them relatively less affected by the impact of the LPR adjustment. Net interest margin: The industry's first-quarter net interest margin is expected to decrease slightly by 4-5 basis points month-on-month, mainly due to the repricing effect brought by the decline in the 24 LPR, with national joint-stock banks with a higher proportion of medium and long-term loans being more affected. Net fee income: expected to narrow significantly. In 24, due to the impact of fund and insurance rate cuts, fee income growth was under pressure. After the rate adjustment is completed, with the recovery of the capital market, it is expected that wealth management fee income will marginally improve. Net other non-interest income: due to the adjustment of bond market interest rates this year, it is expected that some assets measured at fair value will still have floating losses. However, the bank's OCI account has a certain amount of realized investment income to offset the floating gains, so it is comprehensively estimated that other non-interest comprehensive income will be slightly negative. The basic asset quality is stable; some customer segments are under marginal pressure, but because the proportion is not high and the contagion is low, banks have the ability to dispose of them, keeping overall stability. As of the middle of 2024, customer segments with higher bank loan proportions include government-related (33%) and real estate (B-end 5%+C-end 20%), together accounting for 58% of total loans and maintaining stable non-performing loans. The above two customer segments maintain stability in a way that exchanges time for space. Entities (manufacturing & wholesale and retail 15%+operational loans 7%) are under marginal pressure, and the future will depend on stimulus policies for domestic demand. Consumer-related (credit cards 4.5%+consumer loans 3.5%) are already in a period of digesting risk exposure, but because they do not have the industry chain risk transmission properties like B-end enterprises, banks can handle risks relatively smoothly.