Equity Analysis /

CN : Banks - May the force continue to be with you

    Michael Chang
    Michael Chang

    Equity Research Analyst, Banks and Insurance

    14 April 2021
    Published by

    The last major re-rating of large China banks was driven by asset quality improvements. We see this again as the driver of a further bank re-rating. Asset quality clearly turned a corner in 4Q20. With a number of key macro indicators at multi-year highs, we see NPL formation continuing to improve. The FY20 results showed the stability and predictability of big China banks, even under a pandemic stress-test, which suggests sustainable dividends. We see increased investor interest in China banks, which we rate as OW. Top picks are CMB-H, PAB, CCB-H and CITIC-H, in that order.