[ET Net News Agency, 2 November 2020] Daiwa Research lowered its target price for
Postal Savings Bank of China (PSBC) (01658) to HK$5.3 from HK$5.9 and maintained its "buy"
rating.
The research house cited PSBC management from its 3Q results briefing on 30 October
attributing its resilient NIM (down only by 1bp in 3Q) primarily to its proactive control
of deposit funding cost. The loan-to-deposit ratio (LDR) rose steadily by 0.9pp QoQ or
3.6pp YoY to 56.5% at end-3Q.
Going forward, management believes the domestic monetary policy environment has already
returned to neutral and expects the bank's NIM (net interest margin) to benefit from
normalising money market rates. PSBC will strive to lower its deposit cost in 4Q-2021.
Daiwa revised down its 2020-22 EPS forecasts by 13-14%, mainly to factor in the
year-to-date revenue and credit cost impacts from COVID-19. (KL)