Daiwa Research raised its target price for China CITIC Bank (00998) to HK$5.1 from HK$4.6 and maintained its "outperform" rating.
The research house said CITIC's net profit growth further accelerated to 12.3% in 3Q, driving a 9-month net profit up by 10.7%. This was primarily led by its solid non-interest income growth and reduced cost-to-income ratio and tax rate.
Daiwa said CITIC's NPL ratio was flat QoQ at 1.72% as at end-3Q. Its provision coverage ratio went up 10pp QoQ to 174.8% at end-1Q, while its loan loss reserve ratio increased by 16bps QoQ to 3%. Daiwa revised up its 2019-21 EPS forecasts by 3-4% on higher net fee income growth, and now forecast CITIC to post 7-9% net profit growth for 2019-21.
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