[ET Net News Agency, 6 April 2020] Jefferies Research initiated coverage on China
Minsheng Banking (01988) with a "hold" rating and a target price of HK$5.67.
The research house said Minsheng should still see better net interest income growth in
1Q, thanks to interbank rate declines, but is likely to see worse-than-peers NIM (net
interest margin) contraction given its greater exposure to rate-sensitive industries.
While Minsheng may not notch up the worst surge in NPLs (non-performing loan) in this
cycle, given efforts in cutting risky MSE (micro-and-small-enterprise) loans, its
provisioning is way too low, Jefferies noted.
Minsheng is likely to be most affected in an economic downturn rate-cut cycle, given its
more volatile NIM and low provisioning. However, it may outperform in a short-term market
rally, given its relatively high beta. (KL)