Changshu Bank(601128) 国盛证券·2025-04-14 00:23Investment Rating - The report maintains a "Buy" rating for Changshu Bank [6] Core Views - Changshu Bank is expected to benefit from the reform of village banks, which will enhance its market share and expand its operational footprint in Jiangsu Province [20][22] - The bank's growth strategy includes replicating its successful micro and small enterprise lending model across Jiangsu, leveraging the strong demand for inclusive finance in the region [2][27] - The bank's financial outlook remains strong, with projected revenue and profit growth outpacing industry averages, supported by a robust net interest margin and stable asset quality [5][11] Summary by Sections 1. Growth Opportunities - The reform policies for village banks present significant expansion opportunities, with Changshu Bank planning to acquire and convert village banks into branches, thereby increasing its operational presence in underserved areas [20][22] - The bank has already announced the acquisition of several village banks, which will allow it to enhance its service offerings in regions where it currently lacks branches [21][22] 2. Market Expansion and Model Replication - Changshu Bank aims to replicate its successful micro-lending model in other areas of Jiangsu, capitalizing on the province's strong growth in inclusive finance, with a projected balance of inclusive micro loans reaching CNY 3.75 trillion by the end of 2024, growing at 15.6% year-on-year [2][27] - The bank's market share in regions where it has established branches has been increasing, with significant growth in asset size and market penetration observed in recent years [27] 3. Financial Performance Outlook - The bank's revenue, pre-provision operating profit (PPOP), and net profit attributable to shareholders are projected to grow by 10.5%, 10.6%, and 16.2% year-on-year in 2024, respectively, indicating a strong growth trajectory compared to industry averages [5][10] - The net interest margin is expected to remain above industry levels, with a forecasted margin of 2.71% for 2024, reflecting effective cost management and a favorable asset mix [11][12] 4. Asset Quality and Risk Management - Changshu Bank maintains a strong asset quality profile, with a non-performing loan (NPL) ratio of 0.77% as of Q4 2024, which is among the lowest in the industry [14][13] - The bank has been proactive in managing its asset quality, with a high provision coverage ratio of 501%, ensuring robust risk mitigation [14][13] 5. Financial Projections - The bank's net profit is expected to reach CNY 4.28 billion in 2025, with a year-on-year growth rate of 12.22%, continuing a trend of strong profitability [15][16] - Key financial metrics such as return on equity (ROE) and return on assets (ROA) are projected to remain stable, supporting the bank's overall financial health [17][18]