reports
- Kenny Yong Hui Lim
- Tham Mun Hon
China Strategy: Providing greater countercyclical support.
On 12 Oct 24, the MOF updated its countercyclical supportive policies and structural reforms to achieve high quality growth. The key positives are initiatives to resolve local government debt and substantially increase the debt limit. Finer details of the policies are lacking due to pending approval by the Standing Committee of the NPC. Overall, these are positive but we downgrade the banking sector to MARKET WEIGHT due to the potential EPS and ROE dilution on SOE banks from the capital injectio...
0939 CHINA CONSTRUCTION BANK CORPORATION CLASS H
1398 INDUSTRIAL AND COMMERCIAL BANK OF CHINA LIMITED CLASS H
01288 AGRICULTURAL BANK OF CHINA LIMITED CLASS H
M4B CHINA MERCHANTS BANK CO. LTD. CLASS H
01658 POSTAL SAVINGS BANK OF CHINA CO. LTD. CLASS H
3988 BANK OF CHINA LTD
POSTAL SAVINGS BA loses on its star level and is downgraded to Slightl...
The independent financial analyst theScreener just slightly lowered the general evaluation of POSTAL SAVINGS BA (HK), active in the Money Center Banks industry. The title has lost a star(s) at the fundamental level and now shows 3 out of 4 stars. Its exposure to market risk remains nonetheless the same and can be still described as defensive. theScreener slightly downgrades the general evaluation to Slightly Positive for the title on account of the lost star(s). As of the analysis date March 8, ...
- Iris Tan
Morningstar | Chinese Banks Involved in Investigation on North Korea S...
On Tuesday, the media reported that Shanghai Pudong Development Bank, along with China Merchants Bank, or CMB, and Bank of Communications, or BOCOM, were found in contempt for refusing to comply with subpoenas in a North Korea sanctions violation investigation conducted by a U.S. judge. The H-Shares of CMB and BOCOM declined by 7.7% and 3.7%, respectively, though both companies officially denied involvement in any investigations related to possible violations of sanctions, and are in compliance ...
- Iris Tan
Chinese Banks Involved in Investigation on North Korea Sanctions, We R...
On Tuesday, the media reported that Shanghai Pudong Development Bank, along with China Merchants Bank, or CMB, and Bank of Communications, or BOCOM, were found in contempt for refusing to comply with subpoenas in a North Korea sanctions violation investigation conducted by a U.S. judge. The H-Shares of CMB and BOCOM declined by 7.7% and 3.7%, respectively, though both companies officially denied involvement in any investigations related to possible violations of sanctions, and are in compliance ...
- Iris Tan
Morningstar | PSBC’s Revenue Growth Continued to Slow, While Fundame...
No-moat Postal Savings Bank of China’s, or PSBC’s, first-quarter results reflected slowing growth momentum continued in the past quarter. The results were roughly in line with first-quarter net profit contributing 35% of our estimated full-year profits, or 6% year-on-year growth in 2019. Net profit growth rebounded to 12% from 9.8% in 2018. While the pickup in net profit growth was primarily helped by lower credit costs compared with 2018, total revenue growth also slowed to 8% from 16% in 2...
- Iris Tan
PSBC’s Revenue Growth Continued to Slow, While Fundamentals Largely ...
No-moat Postal Savings Bank of China’s, or PSBC’s, first-quarter results reflected slowing growth momentum continued in the past quarter. The results were roughly in line with first-quarter net profit contributing 35% of our estimated full-year profits, or 6% year-on-year growth in 2019. Net profit growth rebounded to 12% from 9.8% in 2018. While the pickup in net profit growth was primarily helped by lower credit costs compared with 2018, total revenue growth also slowed to 8% from 16% in 2...
- Iris Tan
Morningstar | PSBC’s 2018 Net Profit Growth Slowed, Strong Growth Mo...
No-moat Postal Savings Bank of China’s, or PSBC’s, 2018 net profit growth of 9.8% was lower than our expectation for mid-single digit growth. We believe the slower bottom-line growth was primarily a result of increased credit costs in response to the regulator’s call for strict bad debt classification and prudent provision as the economy slowed, while core earning growth remained strong. Credit costs nearly doubled to 1.4% from 0.78% in 2017. We retain our HKD 5.50 fair value estimate. The...
- Iris Tan
PSBC’s 2018 Net Profit Growth Slowed, Strong Growth Momentum and Sol...
No-moat Postal Savings Bank of China’s, or PSBC’s, 2018 net profit growth of 9.8% was lower than our expectation for mid-single digit growth. We believe the slower bottom-line growth was primarily a result of increased credit costs in response to the regulator’s call for strict bad debt classification and prudent provision as the economy slowed, while core earning growth remained strong. Credit costs nearly doubled to 1.4% from 0.78% in 2017. We retain our HKD 5.50 fair value estimate. The...
- Iris Tan
Morningstar | 01658 Updated Forecasts and Estimates from 19 Feb 2019
Following the People's Bank of China's announcement that it will launch central bank bill swaps to improve the liquidity of banks' perpetual bonds, we’re maintaining our fair value estimates for the Chinese banks we cover. According to the central bank’s statement, primary dealers engaged in an open-market operation are allowed to swap the perpetual bonds they hold for the central bank bills. Banks' perpetual bonds with ratings no lower than AA will be included as qualified collateral for a ...
- Iris Tan
Morningstar | PBOC Launches Swaps to Improve Liquidity of Banks' Perpe...
Following the People's Bank of China's announcement that it will launch central bank bill swaps to improve the liquidity of banks' perpetual bonds, we’re maintaining our fair value estimates for the Chinese banks we cover. According to the central bank’s statement, primary dealers engaged in an open-market operation are allowed to swap the perpetual bonds they hold for the central bank bills. Banks' perpetual bonds with ratings no lower than AA will be included as qualified collateral for a ...
- Iris Tan
PBOC Launches Swaps to Improve Liquidity of Banks' Perpetual Bonds; Ne...
Following the People's Bank of China's announcement that it will launch central bank bill swaps to improve the liquidity of banks' perpetual bonds, we’re maintaining our fair value estimates for the Chinese banks we cover. According to the central bank’s statement, primary dealers engaged in an open-market operation are allowed to swap the perpetual bonds they hold for the central bank bills. Banks' perpetual bonds with ratings no lower than AA will be included as qualified collateral for a ...
- Iris Tan
Morningstar | China's Latest RRR Cut Comes as Expected and Has Limited...
We see China’s latest cut in its reserve requirement ratio as having limited impact on the valuations of the Chinese banks we cover. We believe the benefits of liquidity injection are largely offset by downward pressure on net interest margin, given weaker loan pricing and intense deposit competition. Our top picks are Agricultural Bank of China and Industrial & Commercial Bank of China, which are trading at 29% and 26% discounts to our fair value estimates, respectively. Assuming other assum...
- Iris Tan
China's Latest RRR Cut Comes as Expected and Has Limited Impact on Chi...
We see China’s latest cut in its reserve requirement ratio as having limited impact on the valuations of the Chinese banks we cover. We believe the benefits of liquidity injection are largely offset by downward pressure on net interest margin, given weaker loan pricing and intense deposit competition. Our top picks are Agricultural Bank of China and Industrial & Commercial Bank of China, which are trading at 29% and 26% discounts to our fair value estimates, respectively. Assuming other assu....
- Iris Tan
Morningstar | PSBC’s 3Q Net Profit Growth Hampered by Rising Credit ...
No-moat Postal Savings Bank of China’s, or PSBC’s, third-quarter results were a bit disappointing, with growth in total revenue and net profits slowing down to 22% and 15.4% from the year-ago period, versus the 25% and 22% growth in the first half. The slower-than-expected growth was attributable to a sharp decline in investment return and higher-than-expected increase in credit costs over the past quarter. We slightly reduced our full-year revenue growth and net profit growth to reflect rec...
- Iris Tan
PSBC’s 3Q Net Profit Growth Hampered by Rising Credit Costs and Lowe...
No-moat Postal Savings Bank of China’s, or PSBC’s, third-quarter results were a bit disappointing, with growth in total revenue and net profits slowing down to 22% and 15.4% from the year-ago period, versus the 25% and 22% growth in the first half. The slower-than-expected growth was attributable to a sharp decline in investment return and higher-than-expected increase in credit costs over the past quarter. We slightly reduced our full-year revenue growth and net profit growth to reflect rec...
- Iris Tan
Morningstar | People's Bank of China Introduces Required Reserve Ratio...
On Oct. 7, People's Bank of China announced a 1-percentage-point reduction in the Chinese central bank’s required reserve ratio effective Oct. 15. This is the third RRR cut in 2018 following the 100- and 50-basis-point cuts announced in April and June. We retain our fair value estimates for the Chinese banks as we believe the benefits of liquidity injection are largely offset by weaker loan pricing and higher credit costs as the economy is facing mounting challenges both domestically and exter...
- Iris Tan
People's Bank of China Introduces Required Reserve Ratio Cut Effective...
On Oct. 7, People's Bank of China announced a 1-percentage-point reduction in the Chinese central bank’s required reserve ratio effective Oct. 15. This is the third RRR cut in 2018 following the 100- and 50-basis-point cuts announced in April and June. We retain our fair value estimates for the Chinese banks as we believe the benefits of liquidity injection are largely offset by weaker loan pricing and higher credit costs as the economy is facing mounting challenges both domestically and exter...
- Iris Tan
Morningstar | PSBC enjoys strong growth potential thanks to its differ...
Postal Savings Bank of China boasts a strong retail deposit base with market share of 10.5% in China. It is the only large bank that has seen consistent growth in retail deposit share since 2013, thanks to its inherent advantage in the rural banking market due to its longtime operation in the form of postal savings and remittance outlets. It operates the largest branch network, covering all urban cities and 98.9% of counties. Its extensive network translates to strong deposit base, but this does...
- Iris Tan
PSBC enjoys strong growth potential thanks to its differentiated lendi...
With a 25% increase in revenue and growth of 22% in net profit, no-moat Postal Savings Bank of China’s first-half results posted accelerated growth compared with the first quarter, which already exhibited the strongest growth among listed Chinese banks we cover. The results are in line with our expectations, with net profit reaching CNY 32.5 billion, which contributed 56% of our forecast full-year net profit of CNY 57.9 billion and is well on track to deliver our projected 22% growth. We retai...
- Iris Tan
Morningstar | PSBC’s First Half Posted Strong Growth Momentum Amid W...
With a 25% increase in revenue and growth of 22% in net profit, no-moat Postal Savings Bank of China’s first-half results posted accelerated growth compared with the first quarter, which already exhibited the strongest growth among listed Chinese banks we cover. The results are in line with our expectations, with net profit reaching CNY 32.5 billion, which contributed 56% of our forecast full-year net profit of CNY 57.9 billion and is well on track to deliver our projected 22% growth. We retai...
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