Financial Services Association, November 5 (Reporter Zou Juntao) On the afternoon of November 5, Bank of Guiyang held a financial briefing for the third quarter of 2024. At the meeting, some investors pointed out that “the revenue and profit growth rate is not ideal” in the Bank of Guiyang's three-quarter report. Chairman Zhang Zhenghai explained the reason for the decline and said that measures such as increasing investment efforts will be strengthened in the future to keep profit indicators stable.

However, in response to recent market discussions on the impact of stock mortgage interest rate cuts on bank profits, Chief Financial Officer Li Yun said that by the end of September, the parent company's personal housing mortgage loan balance was 21.15 billion yuan, and the impact of this interest rate cut on the bank's profit achievement was limited.

In addition, some investors asked questions about topics such as the reason for the improvement in Bank of Guiyang's non-performing rate in the third quarter and the slowdown in loan growth, and Bank of Guiyang management also provided answers.

It is worth mentioning that at this performance briefing, many investors once again asked Bank of Guiyang to increase its dividend rate. Bank of Guiyang management still only stated that they would “comprehensively consider investors' demands and implement a consistent and reasonable dividend distribution policy.”

Profit indicators continue to decline, and management's response is how to resolve it

The three-quarter report shows that during the reporting period, Bank of Guiyang achieved operating income of 10.937 billion yuan, a year-on-year decrease of 4.42%, and realized net profit attributable to shareholders of the parent company of 3.97 billion yuan, a year-on-year decrease of 6.81%. According to Wind data, looking at a single quarter split, Bank of Guiyang has experienced a year-on-year decline in net profit for 6 consecutive quarters, and the revenue scale for the same period also experienced a year-on-year decline for 5 quarters.

Bank of Guiyang pointed out in its three-quarter report that net interest spreads have narrowed due to factors such as concessions benefiting the real economy, adjustments to the asset structure, and continued decline in market interest rates.

At today's three-quarter report performance briefing, some investors asked Bank of Guiyang management, “Judging from your bank's operating performance in the past two years, Bank of Guiyang's revenue and profit growth rate is very unsatisfactory compared to Guizhou Province's GDP growth rate. Please ask what is the main reason for this clear contrast in growth rates. Bank of Guiyang clearly has operational problems.”

Chairman Zhang Zhenghai pointed out that with the deepening of industrial restructuring in Guizhou Province, under the guidance of various policies to serve the real economy and serve small and medium-sized enterprises, the Bank has taken many measures to support local economic development. As asset-side interest rates declined, net interest spreads and net interest spreads declined, causing the growth rate of operating income and net profit to slow down from the previous high base.

Furthermore, Zhang Zhenghai said that there have been new changes in the current banking environment, the industry has entered a stage of high-quality development, and commercial banks are focusing more on differentiated competitive advantages in terms of balance and liabilities. Zhang Zhenghai said that in the future, the Bank will step up investment efforts, do a good job in pricing management, strengthen cost control, and keep profit indicators stable.

It is worth mentioning that the three-quarter report shows that Bank of Guiyang's latest net interest spread is 1.80%, down 38 basis points from the beginning of the year, but it is only 1 basis point down from the 1.81% disclosed in this year's interim report, indicating that Bank of Guiyang's net interest spread has gradually stabilized.

Chief Financial Officer Li Yun also said at today's exchange meeting that under the industry trend where net interest spreads continue to narrow, while continuing to improve credit investment capabilities, the Bank continues to strengthen debt cost management, adhere to the “volume and price coordination” development concept, achieve a comprehensive balance of “volume, price, and structure” as the management goal, continue to improve deposit term structures, and continuously enhance financial market transactions and active debt capabilities, control interbank debt costs, and gradually fix net interest spreads. The net interest spread is 1.8% for the 3rd quarter of 2024, and is expected to remain basically stable during the year.

Why has the non-performing rate improved, and the provision rate continues to rise?

Many investors noticed that Bank of Guiyang's bad performance rate improved in the third quarter, but provision coverage continued to increase.

The three-quarter report shows that as of the end of September this year, Bank of Guiyang's non-performing loans ratio was 1.57%, down 0.05 percentage points from the end of the first half of the year and 0.02 percentage points lower than at the beginning of the year. In the same period, the provision coverage rate further increased to 262.53%, up 18.03 percentage points from the beginning of the year. This year's interim report revealed that as of the end of June this year, Guiyang Bank's non-performing loan ratio was 1.62%, up 0.03 percentage points from the beginning of the year; the provision coverage rate was 257.81%, up 13.31 percentage points from the beginning of the year.

At the performance briefing held today, some investors asked why the non-performing rate in the three-quarter report improved, and the provision rate continued to rise? Governor Sheng Jun explained in this regard that the Bank continued to broaden the channels for disposal of non-performing loans, and stepped up efforts to dispose of non-performing loans. The non-performing ratio declined in the third quarter. At the same time, the amount of depreciation preparation measures did not decrease, so provision coverage increased.

A Financial Services Association reporter noticed that investors are also quite concerned about the coverage rate of the Bank of Guiyang's related adjustments. At this year's interim report results briefing, some investors asked the Bank of Guiyang management about increasing provision coverage, “Is it just how much you want to raise in order to regulate profits?” At the time, the Bank of Guiyang management stated that the Bank strictly followed management procedures, regularly updated measurement parameters and calculated asset impairment, and met regulatory requirements.

Is corporate loan growth slowing down? Bank of Guiyang management responded on the side

Also, it is worth noting that at the performance briefing held today, some investors asked the Bank of Guiyang management, “Since this year, the growth rate of corporate loans has slowed down. What are the plans to improve it?”

Bank of Guiyang Governor Sheng Jun said that by the end of September, the bank's loan balance to the public was 294.732 billion yuan, 7.09% longer than at the beginning of the year, slightly higher than the average growth rate in the province. In the fourth quarter, the Bank will continue to support the high-quality development of the local economy and effectively serve the real economy.

According to the interim report, as of the end of June this year, Guiyang Bank's various loan balances were 339.401 billion yuan, up 15.361 billion yuan from the beginning of the year, up 4.74%. Among them, the balance for public loans (including discounts) was 290.724 billion yuan, an increase of 15.518 billion yuan over the beginning of the year, an increase of 5.64%. According to the data, Bank of Guiyang only increased its public loan balance by 4.008 billion yuan in the third quarter of this year.

According to the three-quarter report, Bank of Guiyang's credit investment mainly revolves around the “Five Big Articles” to carry out characteristic operations, continue to deepen the region, fully serve the construction of Guizhou's modern industrial system, continuously increase support for the real economy around key regions, key industries, and key customers, and make every effort to build a high-quality credit business system.