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<Research>CICC: CN Financial Support Combo Has Neutral Impact on CN Banks' NIMs; ABC, CCB, ICBC, CMB Recommended
China’s State Council Information Office held a press conference yesterday (24th) to introduce the financial support for high-quality economic development, and lowered the re...
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<Research>CICC: CN Financial Support Combo Has Neutral Impact on CN Banks' NIMs; ABC, CCB, ICBC, CMB Recommended
Recommend
35
Positive
68
Negative
29
 
 

China’s State Council Information Office held a press conference yesterday (24th) to introduce the financial support for high-quality economic development, and lowered the reserve requirement ratio (RRR) and interest rates to support the economy, said CICC in a report.

CICC believed that the mainland's combination of financial policies sent a clear sign of stabilizing growth and confidence. While supporting the real economy and the capital market, the Chinese government also fully considered the impact on banks' net interest margins (NIMs) and asset quality, which helped to achieve co-existence and co-prosperity between the real economy and the banking sector.

Related NewsM Stanley: PBOC's Easing Policy Exceeds Expectations, Indicating Shift in Tackling Deflation
Meanwhile, capital injections into large banks helped maintain stable credit growth and improve resilience to risks. After the capital injection, the dilution of dividend distribution will be depended on whether the banks’ profits can grow faster than its shares. If the bank promotes improvements in the real economy and reduces the cost of bank credit on the basis of stronger capital capacity, the dilution effect on dividend per share will also be limited.

Overall, the broker's three medium-term risk points that warranted attention within 6-12 months (real economy liquidity and asset quality, outstanding property debt, and early repayment by residents) were all addressed in a targeted manner in this round of policies. In CICC view, the key to the fundamentals of banks lies in observing the actual effect of a series of policies on improving long-term economic expectations.

The broker advised investors to select banks with high dividends and stable asset quality, including ABC (01288.HK)  -0.240 (-6.000%)    Short selling $748.53M; Ratio 25.647%   , CCB (00939.HK)  -0.210 (-3.387%)    Short selling $623.54M; Ratio 9.003%   , ICBC (01398.HK)  -0.120 (-2.484%)    Short selling $665.42M; Ratio 15.966%   , CM BANK (03968.HK)  +0.600 (+1.596%)    Short selling $381.78M; Ratio 13.431%   and HSBC HOLDINGS (00005.HK)  +0.600 (+0.857%)    Short selling $394.03M; Ratio 12.255%   .
(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2024-09-27 16:25.)

Related NewsCiti: CN Policy Combination Blow Beats Forecasts, But Mortgage Loan Repricing Won't Turnaround Household Confidence

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