[ET Net News Agency, 8 March 2018] CLSA said CBRC has set three parameters (NPL
classification, NPL disposal, and capital strength) before coverage requirement goes down
to 120% (from 150%) and loan loss reserve ratio to 1.5% (from 2.5%).
The research house said the idea is to reward those that are the most prudent in NPL
classification, most aggressive in disposal, and strongest in capital position.
CLSA noted that its unlikely anyone can enjoy the lowest levels immediately. It kept its
earnings forecast unchanged and don't expect any change in direction for provision
coverage, ie the metric is likely to keep going up.
In any event, the relaxation isn't meant to help boost profit growth of the industry,
said the research house. But it expects that profit growth will pick up on an improvement
in asset quality and NIM. Though largely single-digit, it's attractive given the
below-book valuation. (KL)
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00998 CITIC BANK
Nominal 
4.430 +0.010 (+0.226%) Others
08/03/2018 15:12
[I-bank focus]No free lunch for CBRC's provision cut - CLSA
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