Caixin Media, August 29th (Reporter: Shi Sitong) On the first trading day after the disclosure of the half-year report on August 29th, Xiamen Bank experienced a nearly 7% decline. In terms of performance, the bank's revenue and net income attributable to the parent company in the first half of the year decreased by 2.21% and 15.03% respectively year-on-year, and its net interest margin level also narrowed further by 0.2 percentage points to 1.14%, ranking at the bottom among the 23 listed banks that have disclosed their interim reports.

Xiamen Bank stated that the narrowing of the net interest margin year-on-year was mainly affected by factors such as the continuous downward trend of LPR interest rates, concentrated repricing at the beginning of the year, and the company's increased commitment to reducing fees and benefiting the real economy, resulting in a significant decrease in the average loan interest rate in the first half of the year. At the same time, the bank's provision for credit impairment losses in the first half of the year increased significantly year-on-year, further leading to a decline in net income.

However, immediately after the release of this performance, investors in the capital market also responded. At the close on August 29th, except for Bank of Qingdao remaining flat in the banking sector, the stocks of the other 41 banks all fell. Among them, Xiamen Bank led the decline in bank stocks with a 6.94% drop.

Both revenue and net interest margin further narrowed to 1.14%

Specifically, Xiamen Bank's business scale has grown relatively little this year, and its deposit scale has even been reduced. As of the end of June this year, the bank's total assets were 398.455 billion yuan, up 1.99% from the end of last year. The total amount of loans and advances was 213.287 billion yuan, an increase of 1.71% over the end of last year; the total amount of deposits was 205.287 billion yuan, a decrease of 1.10% from the end of last year.

In terms of performance, Xiamen Bank's revenue and profits also showed a significant decline. In the first half of the year, the bank achieved operating income of 2.892 billion yuan, a decrease of 2.21% year-on-year; net income attributable to the parent company was 1.214 billion yuan, a decrease of 15.03% year-on-year.

In response to this, Zheng Jiawei, Chief Fixed Income Analyst at Yongxing Securities Research Institute, analyzed that Xiamen Bank's poor performance was mainly due to a further narrowing of its interest margin, resulting in a decline in revenue, and a significant year-on-year increase in the provision for credit impairment losses, leading to a profit decline beyond expectations.

From the perspective of income composition, xiamen bank co.,ltd. achieved a net interest income of 2.001 billion yuan in the first half of the year, a year-on-year decrease of 10.58%. "Under the environment of continuous LPR cuts, continuous market interest rate declines, and no improvement in the trend of deposit term,

However, driven by investment income, the bank's non-interest net income in the first half of the year was 0.891 billion yuan, a year-on-year increase of 23.83%. Among them, investment income was 0.557 billion yuan, a year-on-year increase of 283.26%; in contrast, its fee and commission net income decreased by 8.09% compared to the same period last year, reaching 0.18 billion yuan.

As for the interest spread, xiamen bank co.,ltd.'s net interest spread in the first half of the year was 1.06%, and the net interest margin was 1.14%, a year-on-year decrease of 0.22 and 0.20 percentage points, respectively.

"Mainly affected by factors such as the continuous decline of LPR interest rates, concentrated repricing at the beginning of the year, and the company's increased efforts to reduce fees and benefit the real economy, the average loan interest rate has dropped significantly." In the view of xiamen bank co.,ltd., the effects of the bank's optimization measures for net interest margin in the first half of 2024 have gradually become apparent, and after reaching the bottom in January, the net interest margin in the first half of the year has shown a rebound trend.

Among the 23 listed banks that have disclosed their interim reports, xiamen bank co.,ltd. has the lowest net interest margin and the highest decrease in net income attributable to equity holders.

In fact, the narrowing of interest spreads in the banking industry has become common in recent years. However, compared to its peers, xiamen bank co.,ltd.'s interest spread of 1.14% at the end of the first half of this year is already at the bottom among the A-share listed banks that have disclosed their interim reports.

Financial Association reporters found that as of the time of writing, 23 A-share listed banks have disclosed their half-year reports. Among them, only jiangsu changshu rural commercial bank has a net interest margin of more than 2%, reaching 2.79%. Among the other banks, 17 have a net interest margin of over 1.5%, while only bank of shanghai and xiamen bank co.,ltd. have a net interest margin of below 1.2%, reaching 1.19% and 1.14% respectively.

At the same time, affected by factors such as further narrowing of interest spreads, the bank has become the third bank among the 23 listed banks mentioned above to experience a double decline in revenue and net income, and it is the first listed bank with a double-digit decrease in return on equity.

According to analyst Zheng Jiawei's analysis, Xiamen Bank is currently facing certain operational pressures. With relatively high-yield assets maturing and new loans being issued at lower rates, the overall asset yield may further decline. At the same time, the trend of deposit regularization continues, potentially further squeezing net interest margins.

"Factors such as the progress of economic recovery, improvement in interest spreads, and the resolution of residual non-performing assets may also have a certain impact on Xiamen Bank's future performance. In the future, Xiamen Bank still needs to further optimize its business structure, improve net interest margins, and strengthen risk management to cope with the challenges brought by market changes," Zheng Jiawei said.

Banking sector across the board suffered losses, with Xiamen Bank leading the decline by 6.94%.

Furthermore, relative to the significant decline in performance, Xiamen Bank's overall asset quality and capital adequacy level remain stable.

In terms of asset quality, as of the end of June this year, Xiamen Bank's non-performing loan balance was 1.613 billion yuan, with a non-performing loan ratio of 0.76%, unchanged from the beginning of the year, maintaining stable asset quality; provision coverage ratio of 396.22%, risk coverage capacity remains sufficient, although it has decreased by 16.67 percentage points compared to the beginning of the year.

Of particular note is that as of the end of June, the bank's watchlist loan amount was 4.83 billion yuan, an increase of 1.826 billion yuan from the end of the previous year. In response, Xiamen Bank explained that this is mainly targeting customers with fundamentally normal but showing risk signals due to external economic environment changes. The bank downgraded them to the watchlist category based on prudence.

At the same time, as an important indicator reflecting the bank's risk coverage capacity, Xiamen Bank's capital adequacy level has also been further enhanced. As of the end of June, the bank's capital adequacy ratio was 15.44%, Tier 1 capital adequacy ratio was 12.38%, and core Tier 1 capital adequacy ratio was 9.91%, all increasing by 0.04, 0.04, and 0.05 percentage points respectively compared to the beginning of the year.

However, it seems difficult to resist the negative emotions brought to investors by the decline in performance. In terms of the capital markets, as of the close of August 29th, the Xiamen Bank reported 4.96 yuan per share, with a daily decline of 6.94%, leading the decline in bank stocks.

In the view of industry analysts, the sharp fluctuations in the stock price of Xiamen Bank are related to the bank's unsatisfactory financial reports and the previous substantial gains in the bank sector. At the same time, from today's market performance, some short-term funds have shifted to other hot topics, under the influence of several factors, leading to a significant decline in the bank's stock price.

In fact, today's share price decline is not only seen in Xiamen Bank. Overall, on August 29th, A-share listed banks suffered across the board, with all 41 bank stocks except for Bank of Qingdao being down, and the bank sector experienced a daily decline of 2.87%.

In response, the above-mentioned analysts stated that market fluctuations are normal. Looking at the fundamental trends, valuations, and dividend yields of the banking sector, there is still room for valuation recovery in the banking sector, but individual stocks show some differentiation.