[ET Net News Agency, 23 May 2018] HSBC Global Research met Bank of China (BOC)(03988),
China Construction Bank (CCB)(00939), China Everbright Bank (CEB)(06818), China Life
(02628), New China Life (01336), PICC Group (01339) and PICC P&C (02328) on 17-18 May.
The research house said investors were keen to understand the impact of new Wealth
Management Product (WMP) rules - banks see limited capital impact and sustainable dividend
pay-outs, but they see the need to change WMP product design and distribution. Banks'
confidence on capital was based on changing focus to quality over quantity, the ability to
self-fund growth with earnings and a benign asset quality outlook.
HSBC sees China banks getting more differentiated after the current cycle of
developments - CCB with mortgage strength; BOC with international presence; and CEB with
transaction banking businesses.
Meanwhile, Life insurance new business growth is under pressure with some launching
product campaigns to boost sales. While the industry is more focused on raising the
proportion of higher margin protection business, which is supported by agent commission
rates, this is still based on customer demand, case sizes are lower and the selling
proposition is tougher, causing problems for agency retention and hiring that may be
overlooked, it noted.
P&C motor liberalisation is ongoing with a relatively benign impact on industry
profitability anticipated despite higher commission ratios in the face of growing
competition, HSBC added. (KL)