1Q21’s net profit growth before payment of preference share dividends and perpetual bond interest expense rebounded to 18.5% yoy (FY20: 2.6% yoy). This is the strongest growth yoy in 1Q since 2014 and we believe 1Q21 marks the return to normality for banks’ net profit growth. Key asset quality metrics improved. This eases the significant asset quality concerns of investors following the trade war and the pandemic. Reiterate Add rating. TP raised to Rmb27.40 as we reduce the asset quality valuation discount in our stress-test adjusted GGM.
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