Equity Analysis /

CN : Agricultural Bank of China-A - Surviving the ultimate stress test

    Michael Chang
    Michael Chang

    Equity Research Analyst, Banks and Insurance

    30 March 2021
    Published byCGS-CIMB

    FY20 net profit was -0.5% yoy, a marked change from 1H20’s 11% fall. This marks a return to the flattish to low-single digit growth of FY14-FY19 (Fig 2). Investors should note that since FY15, when ABC’s dividend payout ratio fell to 30%, its DPS has never been lower (Fig 4). Stricter NPL recognition to a record high drove 2H20’s NPL ratio increase, as both special mention loan and overdue loan ratio metrics fell hoh. Reiterate Add rating. TP raised by 6% to Rmb3.7, mainly driven by a more positive asset quality outlook within our stress-test adjusted GGM.