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2026-11-02 15:38:16 Citi published a research report stating that CM BANK (03968.HK) reported a 5.6% YoY increase in pre-provision operating profit for the first nine months of 2026 to RMB173 billion, while profit rose 2.4% YoY to RMB116.5 billion, equivalent to 75% of full-year market expectations. Pre-provision operating profit in 3Q increased 8.6% YoY to RMB56.4 billion, benefiting from solid trading gains performance and a lower base effect. However, 3Q profit growth was slower, rising 3.1% YoY to RMB40 billion due to higher credit costs. Return on assets and return on equity in 3Q fell 7 bps and 68 bps YoY to 1.16% and 13.76%, respectively. On the positive side, NIM in 3Q remained flat QoQ at 1.82%; trading gains rose 31.4% YoY and accounted for 9.2% of revenue; and the cost-to-income ratio fell 1.1 ppts YoY to 32.7%. In terms of asset quality, the non-performing loan ratio remained flat QoQ at 0.94%, while credit cost in 3Q was 0.68% (up 19 bps YoY), and the non-performing loan coverage ratio was 389.4%. On the negative side, loan growth slowed, remaining flat QoQ and rising 3.9% YoY in 3Q; retail loans fell 0.2% QoQ and 0.6% YoY; while fee income growth slowed to a 0.9% YoY increase. The broker noted that 3Q pre-provision operating profit growth exceeded its expectations, supported by better-than-expected trading gains, while profit growth was broadly in line with forecasts. However, compared with large banks whose average pre-provision operating profit and profit for the first nine months rose around 14% and 5.9% YoY respectively, CM BANK's growth rates of 5.6% and 2.4% were significantly slower, which may prompt investors to reassess its valuation premium. The broker believes ABC (01288.HK) and CCB (00939.HK) may offer better risk-reward than CM BANK's H shares. Relatively speaking, the broker prefers CM BANK's A shares over its H shares. Citi maintained its Buy rating on CM BANK's H shares with a TP of HKD59.63. (da/ad)~ AASTOCKS Financial News Website: www.aastocks.com This article was automatically translated by AI, the Chinese version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. | |