Industrial Bank (IB) announced its preliminary 2024 results, indicating positive earnings growth and solid asset quality in 4Q24. According to the preliminary results, IB’s attributable net profit grew 0.1% YoY in 2024, against 3% YoY decline in 9M24. We noted that its attributable net profit increased 16.9% YoY in 4Q24, against 10.4% YoY decrease in 3Q24. Its loans/deposits increased 5.1%/7.7% YoY in 2024. Its asset quality remained solid as NPL dropped and allowance to NPLs improved in 4Q24. Valuation is undemanding. Maintain BUY rating.

Key Factors for Rating

Assets quality remained solid in 4Q24. According to its preliminary 2024 results, IB’s NPL ratio was 1.07% at end-December 2024, lower than 1.08% at end-September 2024 and unchanged from 1.07% at end-December 2023.

Meanwhile, its allowance to NPLs reached 237.78% at end-December 2024, against 233.54% at end-September 2024 and 245.21% at end-December 2023.

IB achieved positive net profit growth 4Q24. IB’s attributable net profit grew 0.1% YoY in 2024, against 3% YoY decline in 9M24. We noted that its attributable net profit increased 16.9% YoY in 4Q24, against 10.4% YoY decrease in 3Q24. Besides, its operating profit increased 3.6% YoY in 2024 against decrease of 20.7% YoY in 2023. We believe IB may report mild growth in 2025, mainly thanks to the slower pace of decline in NIM, steady growth in scale and solid asset quality.

Operating income decreased in 4Q24. IB’s operating income grew 0.66% YoY in 2024, against 5.2% YoY decline in 2023. We noted that its operating income decreased 3.1% YoY in 4Q24, against the growth of 1.8% YoY in 3Q24.

Its operating income growth may increase in 2025, as top policymakers will continue to unveil more easing monetary and proactive fiscal policies as well as property and stock market policies.

Valuation

Valuation is undemanding. IB is undervalued as the bank is now trading at 0.53x 2024E P/B. We believe the bank will further strengthened its financial support to the real economy in the future. We expect its ROAE to reach 9.9% in 2024.

We increased our target price from RMB22.07 to RMB23.9, based on about 0.65x 2024E P/B.