[ET Net News Agency, 7 November 2019] Morgan Stanley raised its target price for China
Merchants Bank (CMB)(03968) to HK$50.2 from HK$46.4 and maintained its "overweight"
rating.
The research house hosted a group investor meeting with CMB last week. The bank noted
three key factors that could pressure NIM in 3Q: (1) fading momentum in 3Q following
front-loading of higher yield retail loan in 1Q; (2) an intended slowdown in retail
lending and a loan mix shift to some low-risk infrastructure credit; and (3) growth in
some higher-cost retail deposits to retain clients converting back from wealth management
products.
Despite potential NIM pressure, Morgan expects CMB to deliver 15% CAGR in earnings in
2019-21 and 17% ROE, and the restructuring underway could help fuel future growth. (KL)