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<Research>Citi Rates ABC as Buy; Potential Capital Replenishment May Dilute EPS by 7-8%
Recommend 2 Positive 3 Negative 1 |
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ABC (01288.HK) recorded a 13% YoY increase in 1Q26 pre-provision operating profit, a significant improvement from the 5.3% YoY decline in 4Q25, thanks to a recovery in NIM, strong trading gains, steady growth in fee income, and improvement in the cost-to-income ratio, Citi issued a research report saying. Citi expects the market to react positively to ABC's strong 1Q26 results. Regarding the second round of capital replenishment for large banks, however, ABC is estimated to conduct the capital replenishment at a much lower premium than in the first round, given that current valuations of Chinese banks are significantly higher than the level when the first round of capital replenishment was announced in March 2025. It is likely that the capital replenishment would result in around 7-8% dilution in EPS. Citi has kept a Buy rating on ABC, with a target price of HKD6.94. Auto-translated by AI AASTOCKS Financial News |
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