Ge Long Hui A P P·2025-07-30 06:25Core Viewpoint - UBS report indicates that since 2020, the rise in high dividend yields and improved transparency in fundamentals have driven the performance of Chinese bank stocks. The sustainability of dividends is now a key issue, dependent on the profit outlook and liquidity of these banks [1] Group 1: Profit Outlook and Dividend Sustainability - UBS's base case scenario predicts that Chinese banks will maintain stable profit growth and resume revenue growth starting in 2026, while keeping a steady provisioning path. The firm holds an optimistic view on the sustainability of dividends and potential further increases for Chinese banks [1] Group 2: Stock Ratings and Target Prices - UBS has raised target prices across the board for Chinese bank H-shares, finding dividend returns above 5% attractive. The investment rating for Bank of Communications has been upgraded from "Neutral" to "Buy," with the target price increased from HKD 5.95 to HKD 8.6 [1] - The firm reiterated "Buy" ratings for Industrial and Commercial Bank of China, China Construction Bank, Bank of China, and CITIC Bank, with target prices adjusted: ICBC from HKD 5.98 to HKD 7.79, CCB from HKD 7.4 to HKD 10.2 [1] - China Merchants Bank's rating has been downgraded from "Buy" to "Neutral" due to high valuation and lower dividend yield compared to peers, with the target price raised from HKD 52 to HKD 56 [1]