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RTNominal down4.900 -0.030 (-0.609%)

20/05/2020 17:05

{I-bank focus}HSBC revises target prices for China banks

[ET Net News Agency, 20 May 2020] Despite a notable slowdown in economic activity, HSBC
Global Research said the corporate NPL (non-performing loan) ratio declined for most banks
in 1Q thanks to broad-based credit easing, contingent forbearance offered to borrowers and
increased disposals/write-offs.
For 2020, the research house expects NIM (net interest margin) to compress on the back
of LPR (loan prime rate) cuts, banks' efforts to de-risk, and reduced consumer loan
demand. Also, NIM pressure may sustain into 2021-22, driven by the negative re-pricing of
longer tenure products such as mortgages, bonds, and other financial investments.
Credit growth has accelerated against a weakened macro backdrop. HSBC noted that growth
in 1Q reached a multi-year high for the large banks. Accelerated credit growth may put
pressure on capital sufficiency and infer increased importance of monitoring CET1 ratios
and organic capital generation capability.
HSBC adjusted the China banks' 2020/21 EPS forecasts by -10% to +13%. It also revised
its target prices by -15% to +13% as follows:
Name Rating Target Price
ICBC (01398) Buy HK$7.30 to HK$6.90
CCB (00939) Buy HK$8.30 to HK$8.10
BOC (03988) Buy HK$4.70 to HK$4.00
ABC (01288) Buy HK$4.50 to HK$3.90
PSB (01658) Hold HK$5.00 to HK$4.80
BoCom (03328) Buy HK$7.00 to HK$6.40
CMB (03968) Hold HK$37.6 to HK$42.3
CITIC (00998) Buy HK$5.40 to HK$4.80
MSB (01988) Hold HK$6.30 to HK$5.50
CEB (06818) Buy HK$4.40 to HK$4.10


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