[ET Net News Agency, 11 July 2018] Credit Suisse cut its target price for China Citic
Bank (00998) to HK$6 from HK$6.4, but upgraded its rating to "outperform" from "neutral".
The research house tweaked its estimates by 2-8% on an increase in credit cost for
buffer, asset growth rebound in 2H and stronger momentum for the credit card business.
It said the bank was among the most aggressive in cutting non-loan assets (-24% since
end-2016), though this is stabilising with asset growth to rebound in 2H. Most asset
growth will be driven by 10% loan growth, mostly in credit card and other retail loans.
Credit Suisse said the bank is benefitting from below cycle average credit cost for its
credit card business that is generating ~4% ROA currently and accounting for 30% of the
bank's profits, according to management. The research house estimated credit cost to be
around 150bp (versus 184bp in 2017). (KL)