[ET Net News Agency, 19 April 2018] Credit Suisse assumed coverage on China
Construction Bank (CCB)(00939) with an "outperform" rating, and a target price of HK$10.2.
The research house adjusted its FY2018-19 by 1-2%. It believes CCB is among the best
quality banks in China that possesses the best P&L upside with the most balance sheet
support.
For 2018, Credit Suisse believes CCB's core earnings growth will be driven by improving
NIM on the back of better loan mix and asset yields. Asset growth could moderate a bit
from 2017's level on system's de-leveraging effect with the bank still cautious on certain
high risk sectors. With moderate fee income rebound and step-up in opex growth, Credit
Suisse expects the bank to achieve 7.9% PPoP in 2018.
CCB achieved its additional provisioning need end-2017 with better-than-expected PPoP
growth in 2H 2017 and the bank's ongoing loan loss provisions will likely pace with new
NPL formation, which should decline in 2018. This implies credit costs to be lower in 2018
and may bring a bit of earnings buffer, Credit Suisse added. (KL)