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<Research>UBS: State-Owned CN Banks Stand Out in 1Q; Operating Conditions Improving
Recommend 8 Positive 14 Negative 5 |
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Among Chinese banks' 1Q26 results, state-owned banks beat expectations in both revenue and earnings, UBS said in a research report. State-owned banks also saw average revenue rise 8.5%, the fastest growth since 2021 and above UBS' forecast of 4.6%, mainly driven by a stronger-than-expected rebound in NIM, solid fee income, and a low base for trading income at some banks. Meanwhile, even though strong growth in pre-provision operating profit (PPOP) was partly offset by higher impairment charges, average earnings growth still exceeded market expectations. Overall, UBS believes the 1Q26 results confirm that the operating environment of China's banking sector is improving. At the same time, solid GDP growth in 1Q26 has reduced the urgency for further monetary easing, and earnings growth of state-owned banks this year may see slight upward revisions. UBS remains positive on defensive bank stocks with relatively high dividend yields. It prefers CCB (00939.HK), BANK OF CHINA (03988.HK), ICBC (01398.HK), CITIC BANK (00998.HK), and BANK OF NINGBO (002142.SZ). Auto-translated by AI AASTOCKS Financial News |
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