Huatai Research cut its target price for Chongqing Rural Commercial Bank (CQRC)(03618) to HK$5.2 from HK$5.4 and maintained its "buy" rating.
The research house said CQRC's PPOP grew 9.1% in 1H, driven by net interest income and cost reduction, but was dragged by declining trading income arising from shrinking investments in WMP.
NIM declined 17bp hoh to 2.35%, and Huatai expects further NIM contraction in 2H. Given a NIM high base in 2H 2018 (2.53%), Huatai expects PPOP growth to decline to 2% in 2H. However, it expects stable net profit growth in 2H given ample provision.
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