Cultivating internal strength and growing towards goodness: The stable growth and new momentum of China Zheshang Bank (601916.SH, 02016.HK).

In the process of pursuing quality and efficiency, balancing short-term and long-term goals, and integrating innovation and reform, the financial industry is striving to create a new development environment that advances together with customers and mutually promotes progress, returning to the original intention of serving the real economy and moving towards a new stage of high-quality development. By cultivating internal strength and growing in goodness. An analysis of the China Zheshang Bank (601916.SH, 02016.HK) semi-annual report reveals that guided by the concept of "Building a Good Bank," China Zheshang Bank is more stable and structurally superior, embarking on a new journey of high-quality development. Performance has been steady with various indicators continuously improving. As a long-term practitioner of "Building a Good Bank," China Zheshang Bank has achieved robust growth in its asset-liability scale. The financial report shows that in the first half of the year, China Zheshang Bank's total assets reached 3.25 trillion yuan, an increase of 3.27% from the end of the previous year; at the same time, the total amount of loans and advances increased to 1.81 trillion yuan, a 5.59% increase from the end of the previous year. This is due to China Zheshang Bank's continued focus and investment in the "Five Major Articles," small loans, and weak cyclical industries. China Zheshang Bank emphasizes enhancing the stability and quality of liabilities, with the total liabilities reaching 3.05 trillion yuan as of the end of June, an increase of 3.31% from the end of the previous year. Among them, the balance of deposits was 1.94 trillion yuan, an increase of 3.74% from the end of the previous year, with stable growth in deposit and loan business. Looking at the performance, among the 42 A-share listed banks, many commercial banks saw negative growth in revenue and profit in the first half of the year, while China Zheshang Bank achieved operating income of 35.279 billion yuan, a year-on-year increase of 6.18%; net profit attributable to shareholders of the parent company was 7.999 billion yuan, an increase of 3.31% year-on-year. Revenue and net profit have both grown steadily, advancing steadily in operational performance. At the same time, the non-performing loan ratio has steadily decreased, from 1.53% in 2021 to 1.43% in the first half of 2024; and the capital adequacy ratio is 12.86%, an increase of 0.67 percentage points from the end of the previous year. Behind this, the digital risk control system has played an important role. China Zheshang Bank adheres to smart risk control, solidifying risk preference in a "prudent and stable" manner, and the credit principle of "small amounts and diversification," highlighting accurate identification of credit risks and proactive prevention and resolution, promoting the transformation of risk control logic from gatekeeping to accompaniment. In addition, the bank's income structure has been significantly optimized. This year, commercial banks face pressure to reduce the cost of social financing while maintaining a stable net interest margin, requiring a reduction in funding costs. Therefore, non-interest income has become a key factor in the transformation and adjustment of the bank's income structure. The financial report shows that in the first half of 2024, China Zheshang Bank's non-interest net income was 11.637 billion yuan, an increase of 2.379 billion yuan or 25.70% year-on-year, with non-interest net income accounting for 32.99% of operating income, up 5.13 percentage points from the same period last year to mitigate the impact of narrowing interest rate spreads. The optimization of income structure has made China Zheshang Bank's performance more stable in the counter-cyclical context. It can be said that China Zheshang Bank delivered a answer of "steady progress and improvement" in the first half of the year. Chain-based ecosystem finance provides new momentum for high-quality development. Against the backdrop of double transformations in positioning adjustment and digital transformation in the financial industry, China Zheshang Bank has introduced the innovative concept of chain-based ecosystem finance. The core of this concept is to use digital technology to strengthen the industrial chain and the overall industrial ecosystem, to promote the effective allocation of resources, and further enhance the organizational efficiency and developmental level of the industry. Chain-based ecosystem finance, due to its characteristics of activating and efficiently allocating resources, helps activate the flow of information and capital between the upstream and downstream of the supply chain, reduce information asymmetry and friction in transactions, and further reduce the operating costs of the entire industrial ecosystem. In addition, with the help of digital tools such as smart platforms, data centers, and system infrastructure, chain-based ecosystem finance can deeply understand customer needs, quickly and accurately reach niche markets that traditional finance cannot cover, seamlessly integrate into the business operations and related links of enterprises, forming a fast-response service model to support the integrated development and progress of core enterprises, chain-leading enterprises, and other SMEs. Based on the above features of chain-based ecosystem finance, China Zheshang Bank has launched a series of related applications and practices. For example, in the field of supply chain services in the industrial chain, China Zheshang Bank focuses on building the upstream and downstream ecosystem of key industrial chains and supply chains, creatively providing comprehensive supply chain financial services covering the entire chain, various scenarios, and comprehensive products, dedicated to enhancing the resilience and security of the industrial chain and supply chain. For actual orders or accounts receivable between suppliers and core enterprises, China Zheshang Bank provides financing support to meet the capital needs of suppliers in the inventory preparation stage or help them activate accounts receivable; even if core enterprises cannot provide strong credit guarantees, China Zheshang Bank can expand its financial services range to enterprises in the supply chain through products such as data chain loans based on data analysis. For specific needs in different industries, such as energy, automotive, steel, etc., China Zheshang Bank has tailored nearly thirty supply chain financing solutions. As of the end of June, the bank's supply chain finance loan balance exceeded 170 billion yuan, serving over 3,000 core enterprises and more than 55,000 upstream and downstream customers, with more than 75% being inclusive of micro and small enterprises. Through this series of explorations and practices, China Zheshang Bank has not only increasedEnhanced its own financial service capacity, improved economic efficiency, and also brought new momentum to economic development.BankChina Zheshang BankThe valuation of China Zheshang Bank is relatively low. According to Wind data, the current PB average of Level 1 industry banks is 0.52, while China Zheshang Bank's A-share PB is only 0.42 and its Hong Kong PB is only 0.31, indicating a lower valuation. Additionally, China Zheshang Bank has distributed substantial dividends since listing, with a total of 4 dividends distributed in the first 4 years of its A-share listing, totaling 17.499 billion yuan. The dividend payout ratio stands at 78.29%, with a dividend yield of 6.41% for A-shares and 8.79% for Hong Kong shares. Investors are advised to pay close attention to this bank.She is going to the store to buy some milk and bread.