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=MARKET BUZZ: China Banks Fall; CS Cuts Profit Forecasts On Rising Credit Costs

HONG KONG (Jul 11) -- Most Chinese banks fall more than 2% on Wednesday, underperforming broader market. Postal Savings Bank of China loses 3.4% to HK$4.91 after Credit Suisse cuts its rating to neutral from outperform, and TP to HK$5.20 from HK$6, citing limited potential upside. House lowers profit estimates for four big banks by 4%-6%, after raising their credit cost estimates to 92 basis points from 83 bps, as they continue to build buffer for loan loss reserves; house expects provision to reach decade-high of 3% by end-2018. House maintains core earnings growth estimates at about 9.3% in 2018 and 8.2% in 2019 for Big Four Chinese banks and expects them to benefit from better NIM and resilient loan growth. Cuts TP to HK$9.20 from HK$10.20 for China Construction Bank and to HK$7.50 from HK$8.60 for Industrial & Commercial Bank of China. Outside of the Big Four, CS lifts ratings of China Merchants Bank and CITIC Bank to outperform from neutral due to "attractive" valuation after recent declines, and hikes TP of China Merchants Bank by 1.5% to HK$34. Hang Seng Index down 1.6%.

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