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<Research Report>JPM Believes CN Deposit Rate Reduction Could Boost NIMs & Bank Earnings
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In a research report published by JPMorgan, the broker commented on media reports that the Chinese government has asked the SOE banks to reduce the interest rates on CASA deposits by 5 basis points, and to reduce the deposit rate on time deposits by 10 basis points. The broker found this to be out of its base case estimate, but believed that for the full year, this could improve the net interest margin (NIM) of domestic banks by 5 basis points, as well as boost net profit by 5%. JPM expected PSBC (01658.HK) to benefit the most. JPM forecasted that mixed-ownership banks may follow the lead in the coming months, adding that lowered deposit rates will boost NIMs and bank's earnings. JPM believed that the overall impact of this deposit rate reduction on consumption is weak, but it may accelerate the flow of funds from bank deposits to financial products, and CM BANK (03968.HK) may indirectly benefit through its wealth business. The broker reiterated that SOE banks may outperform the market in the near term, and CM BANK remained the top choice for the medium to long term. AAStocks Financial News |
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