投资建议：我们预计2022/2023/2024年公司的归母净利润分别同比增长14.9%、16.5%、18.9%。我们预计2022/2023/2024年公司的每股盈利分别为0.933元人民币、1.086元人民币和1.291元人民币，2022/2023/2024年每股净资产分别为7.477元人民币、8.175元人民币和9.005元人民币。我们首次给予公司9.58港元的目标价，对应9.4倍2022年市盈率、8.0倍2023年市盈率和6.8倍2024年市盈率，1.2倍2022年市净率、1.1倍2023年市净率和1.0倍2024年市净率。同时，我们首次给予公司“买入”投资评级。
　　公司预计将继续受益于东莞及粤港澳大湾区的发展，未来一段时间盈利增长前景较好。公司业务覆盖的东莞及粤港澳大湾区经济发展前景广阔。我们预计未来一段时间公司的资产质量将改善、盈利增速仍较好。公司的ROE、资产质量、不良贷款拨备覆盖水平均优于其主要同业。相比其主要同业，部分由于活期存款占总存款的比重较高，使得公司的存款成本优势明显，且公司信用成本优势明显。
　　催化剂：2023及2024年公司净息差预计将企稳改善；2023及2024年信用成本预计将下滑。
　　风险因素：区域集中度风险较大；经济状况与我们预期不一致；房地产风险暴露或超预期。
　　

研究报告全文：股票研TableTitleRichardCao曹柱CompanyReportDRCB09889HK究8675523976870EquityResearch公司报告东莞农商银行09889HKzhucaogtjascomhk30December2022BenefitTableSummaryfromtheDevelopmentofDongguanandGuangdong-HongKong-MacaoGreaterBayAreaBuy受益于东莞及粤港澳大湾区的发展买入公InvestmentsuggestionsWeexpecttheCompanysshareholdersnetprofit司RatingTableRankforFY22FY23FY24togrowYoYby149165189respectivelyBuyInitial报WeexpecttheCompanysEPSforFY22FY23FY24tobeRMB0933告RMB1086RMB1291andBVPSforFY22FY23FY24tobeRMB7477评级买入首次覆盖CompanyReportRMB8175RMB9005respectivelyWeinitiatewithaTPofHKD958fortheCompanyequivalentto94xFY22PER80xFY23PER68xFY24PER12xFY22PBR11xFY23PBRand10xFY24PBRMeanwhileweinitiate6TablePrice-18mTP目标价HK958theCompanywithBuyratingRevisedfrom原目标价TheCompanyisexpectedtocontinuetobenefitfromthedevelopmentShareprice股价HK7200告ofDongguanandGuangdong-HongKong-MacaoGreaterBayAreaand证earningsgrowthoutlookisgoodinthenearfutureTheeconomic报StockperformancedevelopmentoutlookforDongguanandGuangdong-HongKong-Macao券股价表现究GreaterBayAreainwhichtheCompanysbusinessescoverisbrightWe研expecttheCompanysassetqualitytoimproveandearningsgrowthtoremainTableQuotePic150ofreturn研goodinthenearfutureTheCompanysROEassetqualityandNPL100究coveragelevelalloutperformitsmainpeersTheCompanyhasoutstanding50券00报advantagesincostofdepositspartiallyasaresultofhighpercentageofthe50告证demanddepositsintotaldepositsandsignificantcreditcostadvantage100150EquityResearchReportcomparedwithitsmainpeers200250CatalystsTheCompanysNIMisexpectedtostabilizeandimprovein2023300and2024creditcostisexpectedtodeclinein2023and2024350Tab400RiskfactorsGreaterregionalconcentrationriskeconomicconditionsarentDec-21Mar-22Jun-22Sep-22Dec-22leIinlinewithourexpectationsexposuretorisksfromtherealestateindustryHSIDRCBnfo1maybebeyondexpectation投资建议我们预计202220232024年公司的归母净利润分别同比增长149165TablePriceChange189我们预计202220232024年公司的每股盈利分别为0933元人民币1086元人ChangeinSharePrice1M3M1Y银民币和1291元人民币202220232024年每股净资产分别为7477元人民币8175元股价变动1个月3个月1年行人民币和9005元人民币我们首次给予公司958港元的目标价对应94倍2022年市Abs071746绝对变动行盈率80倍2023年市盈率和68倍2024年市盈率12倍2022年市净率11倍2023ReltoHSIndex5713298业年市净率和10倍2024年市净率同时我们首次给予公司买入投资评级相对恒指变动AvgsharepriceHK707173BankingSector公司预计将继续受益于东莞及粤港澳大湾区的发展未来一段时间盈利增长前景较好公平均股价港元SourceBloombergGuotaiJunanInternational司业务覆盖的东莞及粤港澳大湾区经济发展前景广阔我们预计未来一段时间公司的资产质量将改善盈利增速仍较好公司的ROE资产质量不良贷款拨备覆盖水平均优于其主要同业相比其主要同业部分由于活期存款占总存款的比重较高使得公司的存款成本优势明显且公司信用成本优势明显催化剂2023及2024年公司净息差预计将企稳改善2023及2024年信用成本预计将下滑Tab风险因素区域集中度风险较大经济状况与我们预期不一致房地产风险暴露或超预期leIYTableearEndTurnoverNetProfitEPSEPSPERBPSPBRDPSYieldROEnfo2Profit年结收入股东净利每股净利每股净利变动市盈率每股净资产市净率每股股息股息率净资产收益率1231RMBmRMBmRMBxRMBxRMB东2020A12047485708461672629710026043139莞2021A12996559009279663687809029049134农2022F14624642509330670747709033351130商2023F165007483108616560817508038859139银2024F188378895129118951900507046270150Sharesinissuem总股数m68885Majorshareholder大股东GuangdongCanvestInvestment434行09889DRCBHKTableBaseDataMarketcapHKm市值HKm495975Freefloat自由流通比率9573monthaveragevol3个月平均成交股数0004257FY22FCoreTier-1CARFY22年核心一级资本充足率13352WeekshighlowHK52周高低HK80006680FY22FNPLratioFY22年不良贷款率08SourcetheCompanyGuotaiJunanInternationalSeethelastpagefordisclaimerPage1of27TablePageHeaderDRCB09889HK1raMthgiRelbaTTABLEOFCONTENTSWithoutstandinggeographicaladvantageDRCBbenefitsfromthedevelopmentofDongguanandGuangdong-HongKong-MacaoGreaterBayArea3DRCBtakesDongguanascenterwithGuangdong-HongKong-MacaoGreaterBayAreaasthecoreandEastGuangdongandWestGuangdongastwocomplements330December2022Dongguansgeographicaladvantageisoutstandingandmanufacturingindustryisdeveloped6LoansgrewatafastpacetogetherwiththedevelopmentofindustrializationofDongguanandtherelativelyrapidlocaleconomicgrowth8NIMwasstilllowmainlyduetotheloweryieldofinterest-earningassetsdespitethatcostofdepositswaslow11Incomefromwealthmanagementagencyservicesremainedthebiggestcontributorforfeeandcommissionincome14Lowcreditcost15GoodassetqualityandHighNPLcoveragelevel152raMthgiRelbaTGoodcapitalbase19DuPontanalysishighROEmainlyasaresultofthelowcreditcost19EarningsForecastearningsgrowthisexpectedtoimprovebenefitingfromthedevelopmentofDongguanandGuangdong-HongKong-MacaoGreaterBayArea20Valuation21Income-basedvaluation21Market-basedvaluation22Finalvaluation22Riskfactors22Appendix2409889HK东莞农商银行DRCBReportCompanySeethelastpagefordisclaimerPage2of27TablePageHeaderDRCB09889HKWithoutstandinggeographicaladvantageDRCBbenefitsfromthedevelopmentofDongguanandGuangdong-HongKong-MacaoGreaterBayArea1raMthgiRelbaTDRCBtakesDongguanascenterwithGuangdong-HongKong-MacaoGreaterBayAreaasthecoreandEastGuangdongandWestGuangdongastwocomplementsDongguanRuralCommercialBankDRCBortheCompanyisthefirstlistedfinancialinstitutioninDongguanTheCompanyisaheadquarter-levellocaljoint-stockcommercialbankandtheleadingcommercialbankinDongguanThe30December2022CompanyspredecessorisDongguanRuralCreditCooperativeAssociationestablishedin1952TheCompanycompletedthereformasunifiedlegalpersonin2005completedthereformasjoint-stockcompanyin2009andsuccessfullylistedontheHongKongStockExchangeinSeptember2021stockcode09889HKTheCompanyisthe13thlistedruralcommercialbankinChinathefourthruralcommercialbanklistedontheHongKongStockExchangeandthefirstlistedfinancialinstitutioninDongguanInFebruary2022thepowertooverseeDongguanRuralCommercialBankwastransferredfromGuangdongProvinceRuralCreditCooperativesAssociation广东省农村信用社联合社toDongguanMunicipalGovernmentwiththeapprovalofGuangdongProvincialGovernmentTheCompanytakesDongguanascenterwithGuangdong-HongKong-MacaoGreaterBayAreaasthecoreandEastGuangdongandWestGuangdongastwocomplementsTheCompanyhasthelargest2rnumberaMthofgoutletsiReamonglbaTcommercialbanksinDongguanAsattheendof1H22505entitiesincludingtheheadquarterand504outletswerelocatedinDongguanandcoveredall32administrativedistrictsSuchbroadnetworkcoveragemakestheCompanydeepenpenetrationintothelocalmarketAsoftheendof1H22theCompanyalsohadfoursub-branchesoutsideDongguanlocatedinGuangzhouZhuhaiHuizhouandQingyuaninGuangdongProvincerespectivelyInadditiontheCompanyhadjointly-establishedfourcountybankswhichwerelocatedinDalangTownofDongguanZhongkaiNationalHi-techIndustrialDevelopmentZoneofHuizhouXinxingCountyofYunfuinGuangdongProvinceandBabuDistrictofHezhouinGuangxiZhuangAutonomousRegionMoreovertheCompanyhadtwonon-whollyownedsubsidiariesZhanjiangRuralCommercialBankandGuangdongChaoyangRuralCommercialBankandinvestedinGuangdongShundeRuralCommercialBankGuangdongXuwenRuralCommercialBankGuangdongLechangRuralCommercialBankandYaanRuralCommercialBankTheCompanyhaspreliminarilyformedanewregionalgroupdevelopmentpatternofOneCorewithTwoWingswithDongguanascenterGuangdong-HongKong-MacaoGreaterBayAreaasthecoreandEastGuangdongandWest09889HKGuangdongastwocomplementsAsattheendof1H22theCompanyhad701entitiesintotalAsoftheendof1H22loansinDongguanandloansoutsideDongguanaccountedfor8029and1971intotalloansrespectivelyTable1DRCBsentitydistributionandloandistributionasattheendof1H22东莞农商银行LoansRMBPercentageProvinceCityEquityinterestPlaceNumberthousandofloansDRCBSelf-owned32townsinDongguan505entities4countybanksincludingDongguanDongguanHuizhouandYunfuinGuangdong2544125708029WiththirdpartiesDalangTownprovinceandHezhouinGuangxiGuangdongprovincehave14outletsintotalProvinceGuangzhouCity1branchReportZhuhaiCity1branchOthercitiesSelf-ownedHuizhouCity1sub-branch624704991971excludingDongguanQingyuanCity1sub-branchCompanyWiththirdpartiesZhanjiangCity2ruralcommercialbanks178outletsinSeethelastpagefordisclaimerPage3of27TablePageHeaderDRCB09889HKShantouCitytotalexcludingtheirheadquarters1raMthgiRelbaTHuizhouCity4countybanksincludingDongguanYunfuCityHuizhouandYunfuinGuangdongGuangxiZhuangProvinceandHezhouinGuangxiZhuangAutonomousHezhouWiththirdpartiesHezhouCityAutonomousRegionhave14outletsinRegiontotalTotal7013168830691000030December2022SourcetheCompanyGuotaiJunanInternationalShareholdingstructureisdiverseandmajorshareholdersareprivateenterprisesAsattheendof1H22thetotalnumberofsharesoftheCompanywasapproximately6889mnsharescomprising5740mndomesticsharesand1148mnHsharesHsharesaccountedfor1667ofthetotalsharesTherewere83legalpersonshareholdersholdingapproximately1362mndomesticsharesrepresenting1977ofthetotalsharesallofwhichareprivateenterpriseshareholdersand57512naturalpersonshareholdersholdingapproximately4379mndomesticsharesrepresenting6356ofthetotalsharesAsattheendof1H22the9largestdomesticshareholdersoftheCompanytogetherheld1344ofthetotalshareswithnosingleholderofdomesticsharesholdingmorethan5ofthetotalsharesindicatingarelativelydiverseshareholdingstructure2raMthgiRelbaTAmongthemthelargestshareholderofdomesticshareholderswasGuangdongCanvestInvestmentCoLtdholding434ofthetotalsharesthesecondlargestshareholderwasDongguanCityKanghuaInvestmentGroupCoLtdholding218ofthetotalsharesandthethirdlargestshareholderwasDongguanNanfangFoodgrainCookingOilCoLtdholding145ofthetotalsharesAllofthesetopthreedomesticshareholdersareprivateenterprisesTherewasnocontrollingshareholderoractualcontrollerfortheCompanyWeexpecttheCompanysshareholdingstructureandthebackgroundformajorshareholderstobenefittheCompanysoperationmoremarket-orientedTable2DRCBsshareholdingsofthetenlargestshareholdersasattheendof1H22NameofShareholderClassofshareClassofShareNumberofsharesPercentageoftotalHKSCCNomineesLimitedHsharesOther11480469901667GuangdongCanvestInvestmentCoLtdDomesticsharesNon-state-ownedlegalperson29924691043409889HKDongguanCityKanghuaInvestmentGroupCoLtdDomesticsharesNon-state-ownedlegalperson150104602218DongguanNanfangFoodgrainCookingOilCoLtdDomesticsharesNon-state-ownedlegalperson99660304145DongguanCityHuimeiDecorationEngineeringCoLtdDomesticsharesNon-state-ownedlegalperson82468873120东莞农商银行DongguanCityHaidaIndustrialCoLtdDomesticsharesNon-state-ownedlegalperson74027320107GuangdongHaideGroupCoLtdDomesticsharesNon-state-ownedlegalperson69784524101DRCBDongguanCityJianhuaPaperCoLtdDomesticsharesNon-state-ownedlegalperson57978360084DongguanCityFengjingGroupCoLtdDomesticsharesNon-state-ownedlegalperson57978360084DongguanCityCommercialCenterDevelopmentCoLtdDomesticsharesNon-state-ownedlegalperson35080472051Total20743767153011SourcetheCompanyGuotaiJunanInternationalTheCompanysteamofseniormanagementshasabundantworkingexperienceinthebankingindustryandisfamiliarwiththeoperatingconditionsinDongguanWangYaoqiutheCompanyschairmanhasmorethan30yearsofexperienceintheoperationandmanagementofbankingbusinessesandworkedinDongguanbranchofBankofChinaandtheDongguanbranchofChinaMerchantsBankFuQiangtheCompanyspresidenthasabundantexperiencesinthebankingindustryandservedinvariouspositionswiththeGuangdongbranchoftheSAFEandtheGuangdongprovincialbranchofPBOCYeJianguangandChenWeitheCompanysvicepresidentbothhavemorethan20yearsofexperienceintheoperationandmanagementofbankingbusinessesandhaveworkedforDRCBformanyyearsOnthewholetheReportCompanysteamofseniormanagementshasabundantexperienceintheoperationandmanagementofcommercialbankingbusinessesandmeanwhilethepresidenthasworkingexperienceintheregulatorsInadditiontheteamofseniormanagementsisalsofamiliarwiththeoperatingconditionsinDongguanCompanySeethelastpagefordisclaimerPage4of27TablePageHeaderDRCB09889HKTable3DRCBsbasicInformationfortheteamofseniormanagements1raMtNumberhgiofSharesReheldlasbataTNamePositionGenderDateofbirthTermofofficeformajorpositiontheendof1H22SharesSecretarytothePartyCommitteeChairmanoftheBoardofDirectorsWangYaoqiuChairmanoftheBoardofDirectorsMaleApril1968401210January2017presentExecutiveDirectorDeputysecretarytothePartyCommitteePresident30December2022FuQiangExecutiveDirectorMaleJuly1970500000July2019presentPresidentMemberofthePartyCommitteeExecutiveDirectorVicePresidentVicePresidentYeJianguangMaleOctober1972500000ChiefRiskOfficerDecember2017presentSecretarytotheBoardofDirectorsJointcompanysecretary2raMthgiRelbaTMemberofthePartyCommitteeVicePresidentChenWeiExecutiveDirectorMaleApril1972113907October2018presentVicePresidentSourcetheCompanyGuotaiJunanInternationalTheCompanyinitiatesthe112348strategicdeploymentandfurtheradvancestransformationandvalueenhancementmissioninthethirdtransformationTheCompanyputsbuildingaregionalmodernruralcommercialbankinggroupasitsdevelopmentvisionThe112348strategicdeploymentisthestrategicplanforthesecondthree-yeardevelopmentplan2021-2023ofthethirdtransformationoftheCompanywhichiswithhighqualitydevelopmentledbythePartybuildingintheneweraasoneguidancebuildingaregionalmodernruralcommercialbankgroupasonegoalimplementationofdigitalizationandgroupingasthetwomajorstartingpointsimplementationoftechnologytalent09889HKandcapitalasthreemajordriversandbuildingacorecompetitivenesssystemoffourbeamsandeightpillars四梁八柱includingacorecustomermanagementsystembasedongridscenarioacorebusinesssystembasedonmarketshareprofitabilityacomprehensiveriskmanagementsystembasedoncomplianceoperationriskmanagementandcontrolandanorganizationalmanagementsystembasedonincentiveandrestraintcorporatecultureTheCompany东莞农商银行planstobuildamodernruralcommercialbankgroupwithmoredistinctivegroupoperationundertheenvironmentofGuangdong-HongKong-MacaoGreaterBayAreaasthecorewithEastGuangdongandWestGuangdongasthetwoDRCBcomplementsMeanwhiletheCompanyintendstofocusoncorecustomersthatisfocusingonthemodernSannongcustomergrouptheThree-chaincustomergroupinadvancedmanufacturingandtheThree-innovationcustomergroupofmediumsmallandmicroenterprisesInadditiontheCompanyintendstofocusoncorebusinessespromotingthecomprehensivedevelopmentofcorporatefinanceretailfinanceSMEfinanceinterbankfinanceanddigitalfinancetocreatebusinesssegmentswithcompetitiveadvantageReportCompanySeethelastpagefordisclaimerPage5of27TablePageHeaderDRCB09889HKFigure1DRCBs112348strategicdeployment1raMthgiRelbaT30December2022SourcetheCompanyGuotaiJunanInternational2raMthgiRelbaTDongguansgeographicaladvantageisoutstandingandmanufacturingindustryisdevelopedDongguansGDPandpercapitalGDPbothrankedamongthetopfiveinmajorcitiesinGuangdongProvincein1H22Dongguanisamega-cityinGuangdongProvinceandoneofthecorecitiesintheGuangdong-HongKong-MacaoGreaterBayAreaDongguaniswell-knownasamanufacturinghubandexportcenterinChinaandislocatedinanimportantstrategicpositioninGuangdongProvinceborderingGuangzhoutothenorthShenzhentothesouthandthePearlRivertothewestIn2021theGuangdong-HongKong-MacaoGreaterBayAreastotaleconomicoutputwasaboutRMB126trnupabout96YoYAsattheendof2021Dongguanhadapermanentresidentpopulationofover105mnIn1-3Q22DongguansGDPincreasedby19YoYtoRMB80012bnranking24thamongmajorcitiesinChinaandfourthinGuangdongProvinceIn09889HK1-3Q22DongguanspercapitaGDPincreasedby40YoYtoRMB764thousandrankingfifthinGuangdongProvinceFigure21-3Q22GDPandGDPsYoYgrowthformajorFigure31-3Q22percapitaGDPandpercapitaGDPscitiesinGuangdongProvinceYoYgrowthformajorcitiesinGuangdongProvince东莞农商银行2500RMBbn35140RMBthousand630120DRCB2000525100415002080310001560102405000520100000DongguanShenzhenGuangzhouFoshanDongguanShenzhenZhuhaiGuangzhouFoshanGDPYoYgrowthofGDPRHSPercapitaGDPYoYgrowthofpercapitaGDPRHSSourceStatisticsBureausofmajorcitiesinGuangdongProvinceSourceStatisticsBureausofmajorcitiesinGuangdongProvinceGuotaiJunanInternationalGuotaiJunanInternationalUrbanizationrateishighandpercapitadisposableincomegrewrapidlyDongguansurbanizationrateishighwhichreached9224rankingfourthinChinaasattheendof2021In2021percapitadisposableincomeforDongguanwasReportRMB62126up99YoYAmongthempercapitadisposableincomeofpermanenturbanresidentswasRMB63740up98YoYandpercapitadisposableincomeofruralpermanentresidentswasRMB43188up112YoYCompanySeethelastpagefordisclaimerPage6of27TablePageHeaderDRCB09889HKDongguanisreferredtoastheWorldFactoryforitsdevelopedmodernizedmanufacturingindustryandmeanwhilesmallandmedium-sizedenterprisesarewelldevelopedIn1-3Q22GDPfortheprimary1rindustraMytsecondaryhgiRindustrelybandaTtertiaryindustryinDongguangrewYoYby4425and09andaccountedfor03579and418ofthetotalGDPrespectivelyAsattheendof2021marketentitiesinDongguanreached146mnrankingfirstamongprefectural-levelcitiesinGuangdongProvincethenumberofindustrialenterprisesinDongguanwas019mnandindustrialenterprisesabovedesignatedsizeexceeded11thousandrankingsecondinChinaCoveringover30specificsectorsand60000kindsofproductsrelativelycompletemanufacturingsystemisformedinDongguanElectronicinformationmanufacturingelectricalmachineryandequipmentmanufacturingtextileclothingshoesandhatsmanufacturingfoodandbeverageprocessing30December2022manufacturingpaperandpaperproductsindustryarethefivemajorpillarindustriesMeanwhileSongshanLakeHi-TechIndustrialDevelopmentZoneranked21stamongthehigh-techindustrialdevelopmentzonesinChinawhichisasapartofthestrategytotransittoIntelligentlymanufacturedinDongguanin2021DongguanseconomyhighlydependsonforeigntradeForeigntradedependenceratioisattheforefrontinmajorcitiesinChinaandforeigntradedependenceratioforDongguanreached1357in1-3Q22In1-10M22theamountoftotalimportsandexportsreachedRMB118263bndown61YoYofwhichtheamountofexportsreachedRMB78737bnup02YoYFigure4YoYgrowthofGDPfortheprimaryindustryFigure5YoYgrowthoftheamountoftotalimportsandsecondaryindustryandtertiaryindustryinDongguanexportsandtheamountofexportsinDongguan2raMthgiRelbaT14201215101086540220182019202020211-10M22-5020182019202020211-3Q22-2-10PrimaryindustrySecondaryindustryTertiaryindustryTotalimportsandexportsExports09889HKSourceStatisticsBureauofDongguanGuotaiJunanInternationalSourceStatisticsBureauofDongguanGuotaiJunanInternationalThedevelopmentofDongguanbenefitsfromfavorablepoliciesIntheOutlineDevelopmentPlanfortheGuangdong-HongKong-MacaoGreaterBayAreaissuedbytheStateCouncilDongguanhasbeenidentifiedasoneoftheninePearlRiverDelta东莞农商银行PRDmunicipalitiesoneofthesevenkeynodecitiesandthecorealongwithShenzhenindevelopingagloballyinfluentialandcompetitiveclusterofworld-classhigh-endmanufacturingindustriesAccordingtoOutlineofDongguan14thFive-YearDRCBPlanfortheNationalEconomicandSocialDevelopment2021-2025DongguanwillcontinuetoimplementaseriesofmeasuresincludingtoestablishanexcellentecologyforinnovationandaninnovationbaseintheBayAreawithglobalinfluencetopromotetheintegrationofindustriesandfinanceandacceleratethedevelopmentasamajorfinancialcityandtosupportthenewurbanizationandruralrevitalizationandbecomeamodelofthedevelopmentofurban-ruralintegrationDongguanalsobenefitsfromvariousotherfavorablepoliciesincludingGuidanceoftheStateCouncilonDeepeningtheRegionalCooperationinthePan-PearlRiverDeltaCloserEconomicPartnershipAgreementbetweenMainlandandHongKongCertainPoliciesofDongguanMunicipalGovernmenttoFurtherSupporttheHigh-qualityDevelopmentoftheNon-publicSectoroftheEconomyandotherpoliciesandguidelinesDepositsandloansinDongguanmaintainedrelativelyrapidgrowthduring2018-10M22InthepastfewyearsbenefitingfromremarkablegeographicaladvantagesfavorablepoliciesandoutstandingstrengthsindevelopedmodernizedmanufacturingindustryDongguanhasmaintainedrelativelyrapideconomicgrowthwhichdrovetheloansinDongguantogrowatafastpaceAsattheendof10M22thebalanceofloansinDongguangrewby123YoYtoRMB166trnandthebalanceofdepositsgrewby152YoYtoRMB229trnTheCAGRforthebalanceofdepositsandloansinDongguanfromReport2018to2021was128and221respectivelyCompanySeethelastpagefordisclaimerPage7of27TablePageHeaderDRCB09889HKFigure6ThebalanceofdepositsandloansandYoYgrowthofthebalanceofdepositsandloansinDongguan1raMthgiRelbaT25RMBtrn302520201515101030December2022055000201820192020202110M22DepositsLoansYoYgrowthofdepositsRHSYoYgrowthofloansRHSSourceStatisticsBureauofDongguanStatisticsBureauofGuangdongProvinceGuotaiJunanInternationalLoansgrewatafastpacetogetherwiththedevelopmentofindustrializationofDongguanandtherelativelyrapidlocaleconomicgrowth2raMthgiRelbaTTherearefourruralcommercialbankslistedinHongKongintotalnamelytheCompanyChongqingRuralCommercialBank03618HKCQRCBANKGuangzhouRuralCommercialBank01551HKGRCBandJilinJiutaiRuralCommercialBank06122HKJIUTAIRCBAllthingsconsideredweselectCQRCBANKGRCBandJIUTAIRCBtodopeeranalysiswiththeCompanyTheCompanysloansgrewatafastpaceinthepastfewyearsanditsmarketshareofdepositsandloansinDongguanremainedbasicallystablein2021and1H22AsthebiggestruralcommercialbankinDongguantogetherwiththedevelopmentofindustrializationofDongguanandtherelativelyrapidlocaleconomicgrowththeCompanysloansgrewatafastpaceanditsgrowthtrendinloanswasbasicallyconsistentwiththatofthebankingindustryinDongguanduring2019-1H22Asattheendof1H22theCompanysloansgrewby128YoYand61YTDandtheCompanysYoYgrowthin09889HKloanswashigherthanmostofitsmainpeersTheCompanysmarketshareofdepositsandloansinDongguanmaintainedanuptrendduring2018-2020andremainedbasicallystableattherangeof202-207and195-199in2021and1H22TheCompanysmarketshareintermsofdepositsandloanshasrankedfirstintheDongguanbankingindustryforconsecutiveyearsreflectingitsstrongcompetitivenessinDongguanandthatitsstrategicplantobuildacorebusinesssystembasedonmarketshareprofitabilityhasbeenwellpromotedAstheCompanyscapitalbaseisstillgoodweexpecttheCompanys东莞农商银行loanswillstillhavealargespacetoincreaseinthenearfutureDRCBTheproportionofloansoutsideDongguanintotalloanswasinanuptrendonthewholeduring2019-1H22TheCompanyplanstobuildamodernruralcommercialbankgroupwithmoredistinctivegroupoperationundertheenvironmentofGuangdong-HongKong-MacaoGreaterBayAreaasthecorewithEastGuangdongandWestGuangdongasthetwocomplementsInordertoexpanditsbusinessdevelopmentspaceandtakeadvantageofthedevelopmentoftheGuangdong-HongKong-MacaoGreaterBayAreatheCompanycontinuedtoexpandthebusinessesoutsideDongguanDuring2019-2021theCompanysloansoutsideDongguangrewatafastpaceandtheproportionofloansoutsideDongguanintotalloanshadbeenmaintaininganuptrendAsattheendof1H22giventheepidemictheCompanysgrowthinloansoutsideDongguansloweddowntoacertainextentandtheproportionofloansoutsideDongguanintotalloansdeclinedYTDsomewhatbutstillhigherthanthatasattheendof2020ReportCompanySeethelastpagefordisclaimerPage8of27TablePageHeaderDRCB09889HKFigure7DRCBsYoYgrowthinloansandYoYgrowthinFigure8YoYgrowthinloansforDRCBanditsmainloansofbankingindustryinDongguanpeers1raMthgiRelbaT3040352630222520181530December2022101451002019A2020A2021A1H222019A2020A2021A1H22YoYgrowthofloansinDongguanDRCBDRCBCQRCBANKGRCBJIUTAIRCBSourcetheCompanyStatisticsBureauofDongguanStatisticsSourcetheCompaniesGuotaiJunanInternationalBureauofGuangdongProvinceGuotaiJunanInternationalFigure9DRCBsmarketsharefordepositsandloansinFigure10DRCBsYTDgrowthinloansoutsideDongguanDongguanandproportionofloansoutsideDongguanin2raMthgiRelbaTtotalloans210350021020520530002002500200195200019019515001851901801000185175500170180001652019A2020A2021A1H2217520182019202020211H22GrowthofloansoutsideDongguan09889HKDepositsLoansProportionofloansoutsideDongguanRHSSourcetheCompanyStatisticsBureauofDongguanStatisticsSourcetheCompaniesGuotaiJunanInternationalBureauofGuangdongProvinceGuotaiJunanInternational东莞农商银行TheCompanyspersonalloansdecreasedslightlybutthepersonalbusinessloansstillmaintainedrelativelyrapidgrowthin1H22DespiteimpactedbytheepidemictheCompanyspersonalloansstillmaintainedgoodgrowthduringDRCB2019-2021primarilyattributabletothegrowingmarketdemandwhichwasinturndrivenbyDongguansurbanizationgrowthinpercapitadisposableincomeandeconomictransformationAsattheendof1H22draggedbythedecreaseinloansofpersonalconsumptioncreditcardsandothersprimarilyimpactedbytheepidemicandthedecreaseinmortgagedloansgiventheweakrealestatemarkettheCompanyspersonalloansslightlydecreasedby04YTDHoweverthepersonalbusinessloansstillmaintainedrelativelyrapidgrowthwithagrowthof149comparedwiththeendof2021WethinkoneofthemainreasonsforthegrowthinpersonalbusinessloanswasthattheCompanycontinuedtodeepenthemarketingofthreethreesSannongThree-chainandThree-innovationcorecustomergroupsandcontinuedtocarryouttheworkofvisitingvillagesvisitingstreetsandvisitingfactoriesandgrantingcreditlimittowholevillageactivitiesIn1H22theCompanycompletedtheregistrationof330000villagerscoveringover90ofthevillagershouseholdsinDongguanGivenDongguangovernmentssupportivepoliciesforthenewurbanizationruralrevitalizationanddevelopmentofurban-ruralintegrationweexpecttheCompanysbusinessesrelatedtoSannongwillcontinuetodevelopatagoodpaceinthenearfutureTheCompanysstructureofpersonalloanswasrelativelybalancedasattheendof1H22ofwhichtheproportionofloansofpersonalconsumptioncreditcardsandothersintotalpersonalloanswashigherComparedwithitsmainReportpeerstheCompanysproportionofloansofpersonalconsumptioncreditcardsandothersintotalpersonalloanswashighertheproportionofpersonalbusinessloansintotalpersonalloanswaslowerandtheproportionofmortgagedloansintotalpersonalloanswasinthemiddlerangewhichshowsthestructureofpersonalloanswasrelativelybalancedWethinktheCompanyhigherproportionofloansofpersonalconsumptioncreditcardsandothersintotalpersonalloanswaspartiallybecauseurbanizationratewashighinDongguanandtheCompanycontinuedtodeepenthemarketingofthreethreescorecustomerSeethelastpagefordisclaimerPage9of27TablePageHeaderDRCB09889HKgroupsAsattheendof1H22theCompanysproportionofmortgagedloansintotalloanswas125lowerthantheaveragelevelofthebankingsectorbuthigherthanmostofitsmainpeersIn2018-1H22theCompanys1raproportionMthgofipersonalReloanslbinaTtotalloansremainedhigherthanmostofitsmainpeersreflectingthattheCompanysoverallloanstructurewasrelativelybalancedFigure11DRCBsYTDgrowthofpersonalloansbyFigure12PersonalloansstructurebyproductforDRCBproductanditsmainpeersasattheendof1H2210010012611330December202290803252908012660704566040363503652040761300204182019A2020A2021A1H22309346-20100DRCBCQRCBANKGRCBJIUTAIRCBPersonalbusinessMortgagesPersonalconsumptioncreditcardsandothersPersonalconsumptioncreditcardsandothersMortgagesPersonalbusinessPersonalloans2raMthgiRelbaTSourcetheCompaniesGuotaiJunanInternationalSourcetheCompaniesGuotaiJunanInternationalFigure13ProportionofpersonalloansintotalloansforFigure14PercentageofmortgagedloansintotalloansDRCBanditsmainpeersforDRCBanditsmainpeersasattheendof1H225018161451640141251210935103082509889HK6204201522018A2019A2020A2021A1H220DRCBCQRCBANKGRCBJIUTAIRCB东莞农商银行DRCBCQRCBANKGRCBJIUTAIRCBSourcetheCompanyGuotaiJunanInternationalSourcetheCompaniesGuotaiJunanInternationalDRCBThestructureofcorporateloanswasbasicallyinlinewiththeindustrialstructureandtheindustrialtransformationandupgradinginDongguanThefavorablepoliciessupportthedevelopmentofhigh-endmanufacturingindustriesandinnovationinDongguanThedevelopedmodernizedmanufacturingindustrytheindustrialtransformationandupgradingandthelargenumberofsmallandmedium-sizedenterprisesinDongguanprovideabigdevelopmentspacefortheCompanyBasedonthedeploymentofthe112348strategicplantheCompanycontinuedtodeepenthemarketingofthreethreescorecustomergroupsandstrengthenthedeliveryoftheloanstoThreechaincustomergroupsofthemodernmanufacturingindustryThree-innovationcustomergroupsofSMEsandagriculture-relatedenterprisesAsattheendof1H22thebalanceofindustrialfinanceloanwasRMB127268mnup89YTDthemanufacturingloanbalancewasRMB45951mnup1669YTDthebalanceofSMEsloanswasRMB136360mnup1385YTDandthebalanceofloanstocustomersofthemodernSannongwasRMB61927mnup997YTDAsattheendof1H22theCompanyscorporateloansincreasedby122YTDAsattheendof1H22thebalanceofcorporateloansgrantedtomanufacturingindustryleasingandcommercialservicesindustryandwholesaleandretailindustryaccountedfor238192and185inthebalanceoftotalcorporateloansrespectivelyIn1H22295253and170ofnewcorporateloansweregrantedtomanufacturingindustryleasingandReportcommercialservicesindustryandwholesaleandretailindustryrespectivelyOnthewholethestructureofcorporateloanswasbasicallyinlinewiththeindustrialstructureandtheindustrialtransformationandupgradinginDongguanThenewloansgrantedtorealestateindustryaccountedfor105intotalnewcorporateloansin1H22andthebalanceofloansgrantedtoCompanyrealestateindustrytookapercentageof53inthebalanceoftotalloansasattheendof1H22reflectingthattheCompanysriskexposuretotherealestateindustryisnothighSeethelastpagefordisclaimerPage10of27TablePageHeaderDRCB09889HKTable4DRCBspercentageofthebalanceofloansinthebalanceoftotalcorporateloansbyindustryandpercentageofnewloansinthetotalnewcorporateloansbyindustryasattheendof1H221raMthgiRelbaTPercentageofthebalanceofloansPercentageofnewloansManufacturing238295Leasingandcommercialservices192253Wholesaleandretail185170Construction1195530December2022Realestate91105Productionandsupplyofpowergasandwater3444SourcetheCompanyGuotaiJunanInternationalNIMwasstilllowmainlyduetotheloweryieldofinterest-earningassetsdespitethatcostofdepositswaslowDuring2018-1H22theCompanysNIMwaslowerthanmostofitsmainpeerswhichwasmainlyduetotheloweryieldofinterest-earningassetsWethinkthemainreasonfortheloweryieldofinterest-earningassetswaspossiblythatthe2raMthgiRelbaTCompanyallocatedmoreontheloansandfinancialinvestmentswithlowrisksreflectingitsfocusonthebalanceofyieldsandrisksThecostofinterest-bearingliabilitiesremainedthelowestin2019-1H22whichshowstheCompanysgoodadvantageonthefundingcostDuring2019-1H22theCompanysNIMhadmaintainedthedowntrendwhichwasmainlyduetothedecliningmarketinterestratesthegovernmentsimpactofpoliciestosupporttherealeconomyandtheCompanysadjustmentonassetstructureIn1H22theCompanysNIMcontractedby10bpsYoYto188Figure15NIMforDRCBanditsmainpeersFigure16Yieldofinterest-earningassetsforDRCBanditsmainpeers31652960275509889HK252350214519东莞农商银行401715352018A2019A2020A2021A1H222018A2019A2020A2021A1H22DRCBDRCBCQRCBANKGRCBJIUTAIRCBDRCBCQRCBANKGRCBJIUTAIRCBSourcetheCompaniesGuotaiJunanInternationalSourcetheCompaniesGuotaiJunanInternationalFigure17Costofinterest-bearingliabilitiesforDRCBanditsmainpeers3432302826242220Report182018A2019A2020A2021A1H22DRCBCQRCBANKGRCBJIUTAIRCBCompanySourcetheCompaniesGuotaiJunanInternationalSeethelastpagefordisclaimerPage11of27TablePageHeaderDRCB09889HKThehigherproportionoffinancialinvestmentsintotalassetsmadetheCompanysyieldofinterest-earningassetslowerthanmostofitsmainpeersinourviewIn2018-1H22theCompanysproportion1ofrloansaMtinhtotalgiassetsRwasellowerbaTthanmostofitsmainpeerswhiletheproportionoffinancialinvestmentsintotalassetswashigherthanmostofitsmainpeersAstheyieldoffinancialassetswasusuallylowerthantheyieldofloanswethinkthehigherproportionoffinancialinvestmentsintotalassetsmadetheCompanysyieldofinterest-earningassetslowerthanmostofitsmainpeersIn2019-1H22theproportionoffinancialinvestmentsoftheCompanyhadbeeninthedownwardtrendThenewfinancialinvestmentsweremainlydrivenbytheincreaseofdebtsecuritiesissuedbythecentralandlocalgovernmentsdebtsecuritiesissuedbyfinancialinstitutionsandinterbankcertificatesofdepositswhiledebtsecuritiesissuedbyenterpriseshaddecreasedyearbyyearAsat30December2022theendof1H22thepercentageofdebtsecuritiesissuedbyenterprisesintotalfinancialinvestmentshadfurtherdeclinedto33OnthewholewethinktheriskofthefinancialinvestmentsisdecliningandthechangeofthestructureoffinancialinvestmentsalsoimpactsitsreturnonfinancialinvestmentsIn2019-1H22theCompanysproportionofloansintotalassetshadbeenintherisingtrendwhichisexpectedtobenefittheCompanysyieldofinterest-earningassetstoremainstableFigure18ProportionofloansintotalassetsforDRCBFigure19YieldofloansforDRCBanditsmainpeersanditsmainpeers70806575602raMthgiRelbaT7055655060455540355030452018A2019A2020A2021A1H222018A2019A2020A2021A1H22DRCBCQRCBANKGRCBJIUTAIRCBDRCBCQRCBANKGRCBJIUTAIRCBSourcetheCompaniesGuotaiJunanInternationalSourcetheCompaniesGuotaiJunanInternationalFigure20ProportionoffinancialinvestmentsintotalFigure21YieldoffinancialinvestmentsforDRCBand09889HKassetsforDRCBanditsmainpeersitsmainpeers5060455540东莞农商银行3550304525DRCB20401535103050252018A2019A2020A2021A1H222018A2019A2020A2021A1H22DRCBCQRCBANKGRCBJIUTAIRCBDRCBCQRCBANKGRCBJIUTAIRCBSourcetheCompaniesGuotaiJunanInternationalSourcetheCompaniesGuotaiJunanInternationalReportCompanySeethelastpagefordisclaimerPage12of27TablePageHeaderDRCB09889HKFigure22YTDgrowthoffinancialinvestmentsforDRCBFigure23DRCBsstructureoffinancialinvestmentsanditsmainpeers1raMthgiRelbaT3010041514834376733137802562037824327218410601581600402019A2020A2021A1H2263165665953530December2022-1020421-2002018A2019A2020A2021A1H22-30InterbankcertificatesofdepositsDebtsecuritiesissuedbyenterprisesDRCBCQRCBANKGRCBJIUTAIRCBDebtsecuritiesissuedbyfinancialinstitutionsDebtsecuritiesissuedbythecentralandlocalgovernmentsSourcetheCompaniesGuotaiJunanInternationalSourcetheCompaniesGuotaiJunanInternationalTheCompanyscostofdepositsremainedlowerthanmostofitsmainpeersin1H22whichwasprimarilyattributabletothehigherproportionofdemanddepositsintotaldepositsinourviewIn2019-2H22theCompanysproportionof2raMthgiRelbaTdepositsintotalliabilitiesmaintainedanuptrendandtheproportionofdepositsintotalliabilitieswashigherthanmostofitsmainpeersasattheendof1H22In2019-1H22althoughtheCompanysdemanddepositsasapercentageoftotaldepositsmaintainedadecliningtrendthedemanddepositsasapercentageoftotaldepositswerestillhigherthanitsmainpeersbyarelativelylargemarginDuring2018-1H22theCompanyspercentageofpersonaldepositsintotaldepositsremainedbasicallystablebutwaslowerthanmostofitsmainpeersAlthoughthemarkerinterestratesdeclinedinrecentyearstheCompanyscostofdepositsmaintainedanuptrendonthewholein2019-1H22whichwasmainlyduetothedecliningproportionofdemanddepositsintotaldepositsandtheseveremarketcompetitionfordepositsinourviewTheCompanyscostofdepositsremainedlowerthanmostofitsmainpeersin1H22whichwasprimarilyattributabletothehigherproportionofdemanddepositsintotaldepositsinourviewThelowercostofdepositsisexpectedtobeoneofthemaincompetitiveadvantagesfortheCompanyandbenefititsprofitabilitytoremainstableandimproveFigure24ProportionofdepositsintotalliabilitiesforFigure25Proportionofdemanddepositsintotal09889HKDRCBanditsmainpeersdepositsforDRCBanditsmainpeers95559050东莞农商银行85458040DRCB75357030652560202018A2019A2020A2021A1H222018A2019A2020A2021A1H22DRCBCQRCBANKGRCBJIUTAIRCBDRCBCQRCBANKGRCBJIUTAIRCBSourcetheCompaniesGuotaiJunanInternationalSourcetheCompaniesGuotaiJunanInternationalReportCompanySeethelastpagefordisclaimerPage13of27TablePageHeaderDRCB09889HKFigure26ProportionofpersonaldepositsintotalFigure27CostofdepositsforDRCBanditsmainpeersdepositsforDRCBanditsmainpeers1raMthgiRelbaT853380317529702765256023552130December20225019451740152018A2019A2020A2021A1H222018A2019A2020A2021A1H22DRCBCQRCBANKGRCBJIUTAIRCBDRCBCQRCBANKGRCBJIUTAIRCBSourcetheCompaniesGuotaiJunanInternationalSourcetheCompaniesGuotaiJunanInternationalIncomefromwealthmanagementagencyservicesremainedthebiggestcontributorforfeeandcommissionincome2raMthgiRelbaTIncomefromwealthmanagementagencyservicesremainedthebiggestcontributorfortheCompanysfeeandcommissionincomein2019-1H22andtheCompanysnetfeeandcommissionincomeincreasedsignificantlyin1H22TheCompanysYoYgrowthinnetfeeandcommissionincomeoutperformeditsmainpeersbyalargemarginin1H22In1H22theCompanysnetfeeandcommissionincomeincreasedby432YoYwhichwasmainlydrivenbythesignificantgrowthofincomefromwealthmanagementagencyservicesfeeincomefromcustodianandotherfiduciaryandfeeincomefromsettlementandclearingserviceswhilebankcardsfeeincomestilldeclinedYoYThecontinuousdeclineinbankcardsfeeincomein2019-1H22waspartiallyasaresultofthereductionandexemptionoffinancecostsinresponsetothefeereductionandinterestconcessionpoliciesofthegovernmentinourviewIn2019-1H22incomefromwealthmanagementagencyservicesremainedthebiggestcontributorfortheCompanysfeeandcommissionincomeInrecentyearstheCompanyhasacceleratedtheconstructionof13NgridconstructionandstrengthenedthenetworkmarketingThroughtechnological09889HKempowermenttopromotetheinnovationanddevelopmentofwealthbusinesstheCompanypromotedthetransformationofwealthmanagementbusinessAsattheendof1H22theCompanystotalwealthmanagementscaleincreasedby52YTDtoRMB48432mnofwhichpersonalwealthmanagementaccountedfor8831AstheCompanysimprovementinthewealthmanagementbusinesscapabilityandthedevelopmentoftheeconomyandtheriseofdisposalincomepercapitainDongguanandtheGuangdong-HongKong-MacaoGreaterBayAreatheCompanysincomefromwealthmanagementagencyservicesis东莞农商银行expectedtoremaingoodgrowthinthenearfutureInrecentyearsasfeeincomefromsettlementandclearingservicesandincomefromotherbusinessesincreasedtheCompanysstructureoffeeandcommissionincomebecamemorebalancedDRCBFigure28YoYgrowthofnetfeeandcommissionincomeFigure29DRCBsstructureofnetfeeandcommissionforDRCBanditsmainpeersincome60100334172453738715778634018015680189266282206029638833003632019A2020A2021A1H2240394-2045420378352-402481900-602018A2019A2020A2021A1H22BankcardsWealthmanagementagencyservices-80CustodianandotherfiduciarySettlementandclearingservicesReportDRCBCQRCBANKGRCBJIUTAIRCBOthersSourcetheCompaniesGuotaiJunanInternationalSourcetheCompanyGuotaiJunanInternationalCompanySeethelastpagefordisclaimerPage14of27TablePageHeaderDRCB09889HKLowcreditcost1raMthgiRelbaTTheCompanyscreditcostmaintainedthelowestamongitsmainpeersin2018-1H22In2019-2021theCompanysgrowthinimpairmentlossesmaintainedadecliningtrendIn1H22theCompanysimpairmentlossesincreasedby223YoYmainlydrivenbythesignificantgrowthofimpairmentlossesinfinancialinvestmentsandtheincreaseofimpairmentlossesincustomerloansandadvancesIn2020-1H22theCompanysgrowthinimpairmentlosseswaslowerthanmostofitsmainpeersIn1H22theCompanysannualizedcreditcostincreasedYoYsomewhatto038andthecreditcostofloanswasstillmuchhigherthanthecreditcostoffinancialinvestmentsIn2018-1H22theCompanyscreditcostmaintainedthelowest30December2022amongitsmainpeersFigure30YoYgrowthinimpairmentlossesforDRCBandFigure31Impairmentlossesstructureitsmainpeers701001536302860901551423055080704062260860305020408158302raMthgiRelbaT6591030200363322019A2020A2021A1H2210-101080-202018A2019A2020A2021A1H22DRCBCQRCBANKGRCBJIUTAIRCBCustomerloansandadvancesFinancialinvestmentsOthersSourcetheCompaniesGuotaiJunanInternationalSourcetheCompaniesGuotaiJunanInternationalFigure32CreditcostforDRCBanditsmainpeersFigure33DRCBscreditcostbyassettype14121209889HK10100808060604东莞农商银行04020200DRCB2018A2019A2020A2021A1H22002018A2019A2020A2021A1H22CreditlossestotalloansDRCBCQRCBANKGRCBJIUTAIRCBLossesoffinancialinvestmentsfinancialinvestmentsSourcetheCompaniesGuotaiJunanInternationalSourcetheCompaniesGuotaiJunanInternationalNoteCreditcostin1H22isannualizedNoteCreditcostin1H22isannualizedGoodassetqualityandHighNPLcoveragelevelNPLratiowasthelowestamongitsmainpeersasattheendof2018-1H22TheCompanysassetqualitywasgoodandNPLratiowasthelowestamongitsmainpeersasattheendof2018-1H22AlthoughimpactedbytheepidemictheCompanysassetqualityperformedwellonthewholein2019-1H22Asattheendof2019and2020theCompanysNPLratiodecreasedYoYIn2021and1H22althoughtheCompanystrictlyimplementedthenewrequirementofloansoverdueformorethan60daysareclassifiedasnon-performingtheCompanysNPLratioremainedrelativelystablegiventhattheCompanystrengthenedtheriskcontrolandstrengthenedthedisposalofNPLsAsattheendof1H22theCompanysNPLratioremainReportunchangedat084comparedwiththeendof2021CompanySeethelastpagefordisclaimerPage15of27TablePageHeaderDRCB09889HKTheCompanysspecialmentionloanratiodecreasedin1H22andbothspecialmentionloanratioandNPLspecialmentionloanratiowerethelowestamongitsmainpeersasattheendof1H221AsraatMthetendhgofi2018R-1H22elbtheaTCompanysspecialmentionloanratioandNPLspecialmentionloanratiobothstayedinthelowrangeamongitsmainpeerswhichfurthershowstheCompanysassetqualitywasgoodAsattheendof1H22theCompanysspecialmentionloanratioandNPLspecialmentionloanratiobothdecreasedby19bpsYTDto174and258andbothspecialmentionloanratioandNPLspecialmentionloanratiowerethelowestamongitsmainpeersAsthelook-forwardingindicatorsthedeclineinspecialmentionloanratioandNPLspecialmentionloanratioshowsthattheCompanysassetqualityoutlookisgoodinthenearfuture30December2022Figure34NPLratioforDRCBanditsmainpeersFigure35SpecialmentionloanratioforDRCBanditsmainpeers2354193152112raMthgiRelbaT10702018A2019A2020A2021A1H222018A2019A2020A2021A1H22DRCBCQRCBANKGRCBJIUTAIRCBDRCBCQRCBANKGRCBJIUTAIRCBSourcetheCompanyGuotaiJunanInternationalSourcetheCompanyGuotaiJunanInternationalFigure36NPLspecialmentionloanratioforDRCBanditsmainpeers76509889HK432东莞农商银行102018A2019A2020A2021A1H22DRCBDRCBCQRCBANKGRCBJIUTAIRCBSourcetheCompaniesGuotaiJunanInternationalTheCompanysNPLratioofcorporateloanshadbeendecliningin2019-1H22buttheCompanysNPLratioofpersonalloanshadbeenincreasingin2020-1H22In2019-1H22theCompanysNPLratioofcorporateloanshadbeendecliningAsattheendof1H22theCompanysNPLratioofcorporateloansdecreasedby15bpsto073comparedwiththeendof2021Asattheendof2021and1H22theCompanysNPLratioofcorporateloanswaslowerthanNPLratioofpersonalloansAsattheendof1H22theCompanysbalanceofNPLsofcorporateloansmainlyconcentratedonwholesaleandretailindustryleasingandcommercialservicesindustrywaterenvironmentandpublicutilitiesmanagementindustryconstructionindustrymanufacturingindustryandagricultureforestryanimalhusbandryandfisheryindustrywhichcombinedlyaccountedfor976ofthebalanceofNPLsoftotalcorporateloansManufacturingindustryandwholesaleandretailindustryaccountforalargeproportionintheeconomyinDongguanwhicharealsothemainborrowersfortheCompanyscorporateloansandthemainsourcesoftheCompanysNPLsofcorporateloansAsattheendof1H22exceptleasingandcommercialservicesReportindustryandagricultureforestryanimalhusbandryandfisheryindustryNPLratioofwholesaleandretailindustrywaterenvironmentandpublicutilitiesmanagementindustryconstructionindustryandmanufacturingindustryalldeclinedYTDIn2020-1H22theCompanysNPLratioofpersonalloanshadbeenincreasingAsattheendof1H22primarilyduetotheimpactCompanyoftheepidemiconindividualandhouseholdincometheCompanysNPLratioofpersonalloansincreasedby23bpsto121comparedwiththeendof2021andNPLratioofpropertymortgagespersonalbusinessloanspersonalconsumptionloansSeethelastpagefordisclaimerPage16of27TablePageHeaderDRCB09889HKandcreditcardoverdraftsallrecordedYTDgrowth1raMthgiRelbaTTheCompanysNPLratiofortheloansinDongguandecreasedbutNPLratiofortheloansoutsideDongguanincreasedin1H22Asattheendof1H22theCompanysNPLsinDongguanaccountedfor839oftotalNPLsComparedwiththeendof2021theCompanysNPLratiofortheloansinDongguandecreasedby4bpsto081butNPLratiofortheloansoutsideDongguanincreasedby12bpsto094whichimpactedtheCompanysassetqualitynegativelyAsaresulttheCompanysNPLratiofortheloansoutsideDongguanoutpacedNPLratiofortheloansinDongguanasattheendof1H22Figure37DRCBsNPLratioofcorporateloansandFigure38DRCBsNPLsasapercentageoftotalNPLs30December2022personalloansandNPLratiobyregionasattheendof1H2220AsapercentageoftotalNPL1816161141210Dongguan08081NPLratioOutsideDongguan06094042raMthgiRelbaT02002018A2019A2020A2021A1H22839CorporateloansPersonalloansSourcetheCompanyGuotaiJunanInternationalSourcetheCompanyGuotaiJunanInternationalTable5DRCBsbalanceofNPLsasapercentageofthebalanceofNPLsoftotalcorporateloansbyindustryandYTDchangeofNPLratioofcorporateloansbyindustryasattheendof1H22ProportionofNPLbalanceYTDchangeofNPLratiopptsWholesaleandretail323037Leasingandcommercialservices22100109889HKWaterenvironmentandpublicutilitiesmanagement202189Construction119033Manufacturing92005东莞农商银行Agricultureforestryanimalhusbandryandfishery19018SourcetheCompanyGuotaiJunanInternationalDRCBTable6DRCBsbalanceofNPLsasapercentageofthebalanceofNPLsoftotalpersonalloansbyproductandYTDchangeofNPLratioofpersonalloansbyproductasattheendof1H22ProportionofNPLbalanceYTDchangeofNPLratiopptsPropertymortgages349026Personalbusinessloans337015Personalconsumptionloans205020Creditcardoverdrafts110045SourcetheCompanyGuotaiJunanInternationalTheCompanysoverdueloanratioandproportionofoverdueloansmorethan90daystoNPLswerebothlowerthanmostofitsmainpeersasattheendof1H22In2021theCompanystrictlyimplementedthenewrequirementofloansoverdueformorethan60daysareclassifiedasnon-performingIn2019and2020theCompanysoverdueloanratioReportproportionofoverdueloanstoNPLsandproportionofoverdueloansmorethan90daystoNPLsalldeclinedwhichshowstheCompanysstandardofNPLidentificationwasstrengthenedHoweverin2021and1H22theCompanysoverdueloanratioproportionofoverdueloanstoNPLsandproportionofoverdueloansmorethan90daystoNPLsallincreasedAsattheendofCompany1H22theCompanysoverdueloanratioproportionofoverdueloanstoNPLsandproportionofoverdueloansmorethan90daystoNPLsincreasedYTDby057ppts7372pptsand800pptsto16220442and8875respectivelyTheSeethelastpagefordisclaimerPage17of27TablePageHeaderDRCB09889HKincreasefortheoverdueloanratioin1H22mainlycamefromthesignificantgrowthinoverdueloanswithin3monthsmainlybecauseindividualloancustomershadtightcashflowsaffectedbytheepidemicandhadloans1rapastMduethperiodicallygiReWelthinkbaTthiswasmainlyattributabletotherecurrenceoftheepidemicinDongguanin1H22beingtemporaryAsattheendof1H22theCompanysoverdueloanratioandproportionofoverdueloansmorethan90daystoNPLswerebothlowerthanmostofitsmainpeersOnthewholewethinktheCompanysstandardofNPLidentificationwasstillrelativelystrictcomparedwithitsmainpeersFigure39OverdueloanratioforDRCBanditsmainFigure40ProportionofoverdueloanstoNPLsforpeersDRCBanditsmainpeers30December202263005250420031502100150002raMthgiRelbaT2018A2019A2020A2021A1H222018A2019A2020A2021A1H22DRCBCQRCBANKGRCBJIUTAIRCBDRCBCQRCBANKGRCBJIUTAIRCBSourcetheCompaniesGuotaiJunanInternationalSourcetheCompaniesGuotaiJunanInternationalFigure41Proportionofoverdueloansmorethan90daystoNPLsforDRCBanditsmainpeers150120906009889HK3002018A2019A2020A2021A1H22东莞农商银行DRCBCQRCBANKGRCBJIUTAIRCBDRCBSourcetheCompaniesGuotaiJunanInternationalTheCompanysNPLcoverageratiowasthehighestamongitsmainpeersandallowancetototalloanratiowashigherthanmostofitsmainpeersasattheendof2019-1H22In2021and1H22theCompanysNPLcoverageratioandallowancetototalloanratiobothincreasedAsattheendof1H22theCompanysNPLcoverageratioandallowancetototalloanratiogrewby1500pptsand012pptscomparedwiththeendof2021respectivelyAsattheendof2019-1H22theCompanysNPLcoverageratiowasthehighestamongitsmainpeersandallowancetototalloanratiowashigherthanmostofitsmainpeersAstheCompanysassetqualityisgoodandtheallowanceissufficienttheCompanyspressureofallowanceprovisioningisrelativelylowwhichisoneofthemaincoredriversfortheCompanytomaintaingoodprofitabilityReportCompanySeethelastpagefordisclaimerPage18of27TablePageHeaderDRCB09889HKFigure42NPLcoverageratioforDRCBanditsmainFigure43AllowancetototalloanratioforDRCBanditspeersmainpeers1raMthgiRelbaT4305038045330402803523030December202230180130252018A2019A2020A2021A1H222018A2019A2020A2021A1H22DRCBCQRCBANKGRCBJIUTAIRCBDRCBCQRCBANKGRCBJIUTAIRCBSourcetheCompaniesGuotaiJunanInternationalSourcetheCompaniesGuotaiJunanInternationalGoodcapitalbase2raMthgiRelbaTTheCompanyscapitalbaseisgoodAsattheendof1H22theCompanysCoretier-1ratiowas1332beingthehighestamongitsmainpeersandCARratiowas1453beinghigherthanmostofitsmainpeersThegoodcapitalbaseleavesroomforthefutureexpansionoftheCompanysassetsandprovidesgoodsupportfortheCompanysfutureearningsgrowthFigure44Coretier-1ratioforDRCBanditsmainpeersFigure45CARratioforDRCBanditsmainpeers1517141613151214111309889HK10129118102018A2019A2020A2021A1H222018A2019A2020A2021A1H22东莞农商银行DRCBCQRCBANKGRCBJIUTAIRCBDRCBCQRCBANKGRCBJIUTAIRCBDRCBSourcetheCompaniesGuotaiJunanInternationalSourcetheCompaniesGuotaiJunanInternationalDuPontanalysishighROEmainlyasaresultoflowcreditcostTheCompanysROEwasthehighestamongthemainpeersin1H22mainlyduetolowercreditcostIn1H22theCompanysgrowthinoperatingincomePPOPandshareholdersnetprofitwasbetterthanmostofitsmainpeersIn1H22theCompanysoperatingincomeincreasedby112YoYmainlyduetothesignificantgrowthofnetfeeandcommissionincomeandothernetnon-interestincomeAsaresultofthegoodgrowthinoperatingincomeandthedecliningcost-to-incomeratioPPOPgrewby158YoYGiventhatimpairmentlossesincreasedby223YoYtheCompanysshareholdersnetprofitincreasedby127YoYAsfortheresultsofDuPontanalysistheCompanysROEwasthehighestamongthemainpeersin1H22whichwasmainlyasaresultofthelowercreditcostTheproportionofoperatingincometototalassetswaslowerthanmostofitsmainpeerswhichwasmainlybecausenetinterestincomeasapercentageoftotalassetswaslowwhilenetfeeandcommissionincomeasapercentageoftotalassetsandothernetnon-interestincomeasapercentageoftotalassetswereboththehighestamongthemainpeersThelowproportionofnetinterestincometototalassetswasmainlyattributabletotheReportlowNIMTheproportionofothernetnon-interestincometototalassetswasthehighestamongthemainpeerswhichisexpectedtoberelatedtotherelativelyhighproportionofinvestmentassetsinthetotalassetsandtheCompanysgoodtradingoperationcapabilityTheCompanysoperatingexpensesasapercentageoftotalassetswerehigherthanmostofitsmainCompanypeersSeethelastpagefordisclaimerPage19of27TablePageHeaderDRCB09889HKTable7DuPontanalysisforDRCBanditsmainpeersin1H221H22DuPondAnalysisDRCBCQRCBANK1rGRCBaMthgiJIUTAIReRCBlbaTInterestincome370402363548Interestexpense195204211309Netinterestincome175198152239Netfeeandcommissionincome016016009002Othernetnon-interestincome04602302601430December2022Netnon-interestincome061039035017Operatingincome236237187255Operatingexpenses071067054107Shareofprofitsofassociates001nana001PPOP166170133148Impairmentlosses037056080085Profitbeforetax130114053063Incometaxexpense0100130032raMthgi010RelbaTAnnualizedROA119101049053Equitymultiplier1204118413751362AnnualizedROE14351191680722SourcetheCompaniesGuotaiJunanInternationalEarningsForecastearningsgrowthisexpectedtoimprovebenefitingfromthedevelopmentofDongguanandGuangdong-HongKong-MacaoGreaterBayAreaTheeconomicdevelopmentoutlookfortheareaswhichtheCompanysbusinessescoverisbrightGuangdong-HongKong-MacaoGreaterBayAreaisoneofthemajordevelopmentcoreareaswhichtheChinesegovernmentsupportswith09889HKstrongeconomicvitalityAsoneofthemajorcitiesinGuangdong-HongKong-MacaoGreaterBayAreabenefitingfromfavorablepoliciesDongguanseconomyisdevelopedandtheprospectisbroadInthenearfuturethecoordinateddevelopmentoftheGuangdong-HongKong-MacaoGreaterBayAreaandthepromotionofindustrialtransformationandupgradinginthePearlRiverDeltaareaareexpectedtoeffectivelydrivetheeconomicdevelopmentandindustrialtransformationandupgradinginDongguanInadditiontoitsownindustrialtransformationandupgradingDongguanisalso东莞农商银行expectedtoundertakeindustrialtransferfromothercitiesintheGreaterBayAreaandtherearestillcoredrivingforcesforthefutureeconomicgrowthinDongguanDRCBDrivingforcesfordepositsandloansinDongguantomaintainrelativelygoodgrowthareexpectedtoremaininthenearfutureInthenearfutureweexpecttheeconomicdevelopmentwilldrivedepositsandloansinDongguantomaintainrelativelygoodgrowthInadditionweexpectthefollowingfactorstocontinuetosupporttheloansanddepositsinDongguantogrow1therearealargenumberofsmallmediumandmicroenterprisesinDongguanwhosefinancialservicedemandishuge2givenhighurbanizationratehighindustrializationlevelintheruralareasandhighincomelevelforruralresidentsthemodernSannongdevelopswellinDongguan3percapitadisposableincomeinDongguangrewrapidlyandespeciallyforpercapitadisposableincomeofruralpermanentresidentsWeexpecttheCompanysearningswillcontinuetogrowatagoodpacein2H22In2H22giventhatcrediteasingcontinuesalongwiththeeconomicrecoveryweexpecttheCompanysloanstostillgrowatarelativelygoodpaceAsChineseliquidityconditionsremainsreasonablyloosemarketinterestratesremainatalowlevelandthegovernmentspoliciestosupporttherealeconomytorecovercontinueweexpecttheCompanysNIMwillcontinuetoslightlydeclinecomparedwithReport1H22In2H22weexpecttheCompanysnetfeeandcommissionincometostillrecordagoodgrowthgiventheeconomicrecoveryandtherelativelystableconditionoftheepidemicGiventheeconomicrecoverytherelativelystableconditionoftheepidemicandsupportingmeasuresfortherealestateindustrytotakeeffectweexpecttheCompanysassetqualitytoremainCompanystablebutslightlydeclineandtheCompanysgrowthinimpairmentlosseswillremainrelativelystableOnthewholeweexpecttheCompanysearningswillcontinuetogrowatagoodpacein2H22SeethelastpagefordisclaimerPage20of27