Core Viewpoint - CICC has raised the revenue forecasts for Hang Seng Bank for 2025E and 2026E by 2.4% and 4.3% to HKD 41 billion and HKD 42.1 billion respectively, while lowering the 2025E net profit forecast by 13.9% to HKD 14.7 billion and raising the 2026E net profit forecast by 4.1% to HKD 17.6 billion [1] Group 1 - 2Q25 revenue met expectations, but profit fell short due to impairment losses related to Hong Kong commercial real estate [2] - Net interest income decreased by 7% in 1H25, with weak loan demand and declining interest margins; the net interest margin was 1.99%, down from 2.29% in 1H24 [3] - Non-interest income grew significantly, with fee income up 23% and other non-interest income up 46%, driven by securities brokerage services and increased foreign exchange trading revenue [4] Group 2 - Impairment losses increased significantly, more than doubling compared to the same period last year, leading to a rise in credit costs to 1.19% [5] - Despite the decline in net profit, the company increased dividends and maintained share buybacks; the core Tier 1 capital ratio was 21.3% at the end of 1H25 [6]

Core Viewpoint - The banking industry is facing significant pressure as net interest margins have fallen below non-performing loan ratios for the first time, indicating a critical need for banks to diversify their income sources beyond interest income [1][2][4]. Group 1: Financial Performance Indicators - In Q1, the net interest margin for Chinese commercial banks decreased to 1.43%, down 9 basis points from the previous quarter, while the non-performing loan ratio rose to 1.51%, an increase of 0.01 percentage points [2][4]. - Among the major banks, state-owned banks had the lowest non-performing loan ratios at 1.22% and 1.23%, while rural commercial banks faced the highest at 2.86% [4]. - A total of 9 out of 42 listed banks reported net interest margins lower than their non-performing loan ratios, highlighting the growing financial strain within the sector [4][5]. Group 2: Challenges and Market Dynamics - The banking sector is experiencing ongoing challenges due to declining asset quality, which is affecting profitability and the ability to cover costs associated with credit, operations, and capital [4][6]. - Analysts indicate that the pressure on net interest margins is exacerbated by weak credit demand and a shift towards lower-yielding short-term loans, leading to a decline in asset yields [6][7]. - The average net interest margin for listed banks has been on a downward trend for five consecutive years, with many banks now below the 1.8% warning line set by market pricing mechanisms [7][8]. Group 3: Strategic Responses - To address the challenges posed by low interest rates, banks are encouraged to diversify their income sources, focusing on non-interest income and other financial services [8][9]. - Recommendations include reducing deposit interest subsidies and hidden costs associated with deposits to alleviate margin pressures [8]. - Banks are advised to adopt a more resilient and balanced income structure, optimizing their liabilities and controlling costs to enhance profitability [9].

Core Viewpoint - Bank stocks have shown resilience and have risen against the market trend, with the China Securities Bank Index reaching a new high since February 2018, driven by multiple favorable policies and market conditions [1][2][3]. Market Performance - On May 13, the China Securities Bank Index rose by 1.53% to close at 7629.55 points, marking a new high since February 2018, with many individual stocks hitting historical highs [1][2]. - Over the last five trading days, the bank sector has increased by 5.76%, outperforming the Shanghai Composite Index, which rose by 1.77% [2]. - Notable individual stock performances include Chongqing Bank and Shanghai Bank, both rising over 3%, with Chongqing Bank leading with a 10.9% increase [2]. Policy Impact - Recent monetary policies, including interest rate cuts and reserve requirement ratio reductions, are expected to have a neutral impact on banks' net interest margins, with adjustments on the liability side helping to mitigate pressures [1][6][7]. - The establishment of Financial Asset Investment Companies (AIC) is seen as a significant opportunity for banks to enhance their comprehensive benefits and support technology enterprises [3][4][5]. Earnings and Profitability - Despite the pressure on profitability, bank stocks remain attractive due to their stability and dividend yields, especially as regulatory measures encourage long-term capital inflows [3][4]. - The average net interest margin for listed banks is projected to be 1.52% by the end of 2024, continuing a five-year decline, with a notable decrease in interest income reported for the previous year [6][8]. Strategic Adjustments - Banks are adapting to the low-interest-rate environment by diversifying their income sources and optimizing their operational structures to maintain profitability [8][9]. - The focus on non-interest income generation is becoming increasingly critical for banks to navigate the challenges posed by a shrinking net interest margin [8][9].

Investment Rating - The report maintains a "Recommended" investment rating for the company with a target price of 6.36 CNY / 5.04 HKD [1][6]. Core Insights - The company reported a revenue of 164.93 billion CNY in Q1 2025, reflecting a year-on-year increase of 2.56%. However, the net profit attributable to shareholders decreased by 2.90% to 54.36 billion CNY [1][6]. - Non-interest income was a significant contributor to revenue growth, with a notable increase of 18.91% year-on-year, amounting to 57.20 billion CNY [6]. - The asset quality remained stable, with a non-performing loan (NPL) ratio holding steady at 1.25% and a provision coverage ratio of 197.97%, down 2.63 percentage points from the end of the previous year [1][6]. Financial Performance Summary - **Revenue and Profitability**: The total revenue for Q1 2025 was 164.93 billion CNY, with a year-on-year growth of 2.56%. The net profit attributable to shareholders was 54.36 billion CNY, down 2.90% year-on-year [1][6]. - **Non-Interest Income**: Non-interest income reached 57.20 billion CNY, up 18.91% year-on-year, driven by significant contributions from foreign exchange gains and other business revenues [6]. - **Loan and Deposit Growth**: The total loan and advance amount reached 22.61 trillion CNY, an increase of 4.7% from the beginning of the year. Deposits also grew by 5.82% to 25.61 trillion CNY [6]. - **Net Interest Margin**: The net interest margin for Q1 2025 was 1.29%, a decrease of 11 basis points from the end of 2024, primarily due to downward pressure on asset pricing [6]. - **Asset Quality**: The NPL balance increased to 281.2 billion CNY, with the NPL ratio stable at 1.25%. The provision coverage ratio was 198%, reflecting a slight decrease [6][10]. Future Projections - Revenue growth is projected to be 2.2%, 3.7%, and 4.3% for 2025, 2026, and 2027 respectively. Net profit growth is expected to be 0.4%, 3.2%, and 3.4% for the same years [6][7]. - The target price is based on a projected price-to-book (PB) ratio of 0.75x for 2025, with a current valuation of 0.66x [6].

Core Viewpoint - The bank reported a slight increase in revenue for Q1 2025, driven by strong non-interest income, but net profit experienced a decline due to rising costs and taxes [1][2]. Revenue and Profit Analysis - Q1 2025 revenue reached 164.93 billion yuan, up 2.56% year-on-year, with non-interest income contributing significantly at 57.20 billion yuan, a year-on-year increase of 18.91% [1][2] - The net profit attributable to shareholders was 54.36 billion yuan, down 2.90% year-on-year, impacted by increased costs and tax expenses [1][2] - The cost-to-income ratio for Q1 2025 was 26.17%, an increase of 0.8 percentage points compared to the same period last year [2] Loan and Deposit Growth - The total loans and advances reached 22.61 trillion yuan by the end of Q1 2025, an increase of 1.01 trillion yuan, or 4.7% year-to-date [3] - Corporate loans grew by 966.36 billion yuan, a 6.6% increase, while personal loans saw a modest increase of 48.89 billion yuan, or 0.72% [3] - Total deposits amounted to 25.61 trillion yuan, up 1.41 trillion yuan, or 5.82% from the end of the previous year, with personal deposits growing by 6.6% [3] Asset Quality and Interest Margin - The non-performing loan (NPL) ratio remained stable at 1.25%, with the NPL balance increasing to 281.2 billion yuan [4] - The provision coverage ratio was 198%, down 2.6 percentage points from the end of the previous year, indicating a stable asset quality [4] - The net interest margin for Q1 2025 was 1.29%, a decrease of 11 basis points from the end of 2024, primarily due to downward pressure on asset pricing [4] Investment Outlook - The bank plans to raise up to 165 billion yuan through a targeted A-share issuance to strengthen its core tier one capital [5] - Revenue growth forecasts for 2025-2027 have been adjusted to 2.2%, 3.7%, and 4.3%, while net profit growth forecasts are set at 0.4%, 3.2%, and 3.4% [5] - The target price is set at 6.36 yuan, with a corresponding target price-to-book ratio of 0.75x for 2025 [5]

Core Viewpoint - Company maintains earnings forecast for Standard Chartered Group (02888) for 2025, but lowers 2026 net profit estimate by 14% to $3.96 billion due to tariff-related uncertainties [1] Financial Performance - 1Q25 adjusted revenue increased by 5% year-on-year to $5.4 billion, and adjusted net profit attributable to ordinary shareholders rose by 8% to $1.5 billion, both exceeding market expectations [1] - Net interest income grew by 5% year-on-year to $2.8 billion but declined quarter-on-quarter, aligning with market expectations [2] - Non-interest income increased by 4% year-on-year to $2.6 billion, contributing significantly to revenue exceeding expectations [2] Business Segment Performance - Wealth management and global financial markets segments showed strong performance, with revenue growth of 28% and 14% respectively [3] - Wealth management added 72,000 new clients in 1Q25, a 14% increase year-on-year, with high-net-worth client assets under management growing by 22% to $13 billion [3] - Global markets segment also reported a strong start in 2Q25, driven by continued client demand for risk hedging [3] Credit Quality - Annualized credit cost slightly increased to 31 basis points, with credit impairment charges rising by 24% year-on-year to $220 million [4] - Retail banking faced repayment pressures on some unsecured loans due to rising interest rates, while corporate banking showed minimal credit impairment charges [4] - Exposure to public real estate in Hong Kong is $2.2 billion, less than 0.5% of total loans, with 83% secured and an average loan-to-value ratio of approximately 40% [4]

Investment Rating - The investment rating for the company is "Buy-A" with a 6-month target price of 26.01 CNY, compared to the current stock price of 20.87 CNY [7]. Core Views - The company's performance in Q1 2025 showed a decline in operating income by 3.58% year-on-year, with a decrease in pre-provision profit by 4.35% and net profit attributable to shareholders down by 2.22%. The main factors affecting performance were the expansion of interest-earning assets and a decline in net non-interest income [2][10]. - The asset quality remains stable, with a non-performing loan ratio of 1.08% and a provision coverage ratio of 233.42% as of Q1 2025, indicating a reasonable level of asset quality management [10][11]. Summary by Sections Financial Performance - In Q1 2025, the company's total assets grew by 3.65% year-on-year, with total loans increasing by 4.83%. The bank added 123.4 billion CNY in total assets and 78.8 billion CNY in loans during the quarter [3][4]. - The net interest margin for Q1 2025 was 1.80%, showing a year-on-year decline of 7 basis points, while the cost of liabilities decreased, helping to mitigate the impact of declining interest margins [6][10]. Loan and Deposit Structure - Corporate loans showed a year-on-year growth of 6.33%, with a focus on supporting the real economy, particularly in green and technology loans, which exceeded 1 trillion CNY [4][5]. - Retail loan growth was weak, with a year-on-year increase of only 0.96%, and a net decrease of 26 billion CNY in retail loans during the quarter [4]. Non-Interest Income and Cost Management - Non-interest income declined by 12.42% year-on-year, primarily due to a 21.50% drop in investment income, although net fee income increased by 8.54% [10][11]. - The cost-to-income ratio increased slightly to 24.13%, reflecting the impact of declining income [11]. Future Outlook - The company is expected to maintain stable credit issuance while enhancing deposit cost control, with an anticipated decline in net interest margin of around 10 basis points for the year [11]. - Revenue is projected to grow by 0.54% year-on-year in 2025, with net profit growth estimated at 1.91% [11].

Investment Rating - The investment rating for the company is "Buy-A" with a target price of 55 CNY, maintaining the rating [4][13]. Core Views - The company's Q1 2025 performance shows a reliance on scale expansion for growth, with a year-on-year revenue decline of 3.09% and a net profit increase of 2.08% [1][12]. - The bank's strong deposit base supports asset expansion, despite a narrowing net interest margin and slowing non-interest income growth [1][12]. - The outlook for 2025 suggests a modest revenue growth of 0.61% and a net profit growth of 1.24%, with expectations of a recovery in the capital market aiding performance [13]. Summary by Sections Financial Performance - In Q1 2025, the bank's average interest-earning assets increased by 8.7% year-on-year, with new interest-earning assets amounting to 176.6 billion CNY, a year-on-year increase of 8.4 billion CNY [1][18]. - The net interest margin for Q1 2025 was 1.91%, down 11 basis points year-on-year, primarily due to a decrease in asset yield [2][3]. Loan and Deposit Structure - New loans in Q1 were primarily driven by corporate lending, while retail lending showed weakness, particularly in credit card loans [2][12]. - The bank's interest-bearing liabilities grew by 8.6% year-on-year, with deposits increasing by 9.4%, significantly outpacing loan growth of 5.2% [2][12]. Non-Interest Income - Non-interest income from fees and commissions decreased by 2.51% year-on-year, with wealth management income growing by 10.45% [8][12]. - Other non-interest income faced pressure, declining by 22.2% year-on-year due to market rate fluctuations affecting bond and fund investments [9][12]. Asset Quality - The bank's non-performing loan ratio remained stable at 0.94%, with a slight increase in the attention ratio to 1.36% [9][10]. - The bank's provision coverage ratio is stable at around 410%, indicating strong risk absorption capacity [10][12]. Future Outlook - The bank is expected to face continued pressure on net interest margins due to weak effective financing demand, but its strong deposit advantage is anticipated to maintain a relatively high margin compared to peers [8][12]. - The report highlights the potential for recovery in non-interest income as market conditions improve, particularly in the capital markets [9][12].

Investment Rating - The investment rating for Postal Savings Bank is "Buy" and is maintained [9]. Core Views - The report highlights a slight decline in revenue growth of -0.1% and a net profit decrease of -2.6% for Q1 2025, with interest income down by 3.8%. However, non-interest income saw a significant increase of 14.8%, driven by an 8.8% growth in fee income and a 21.7% rise in other non-interest income [2][10]. - The bank has effectively reduced management expenses, leading to a 6.5% increase in Pre-Provision Operating Profit (PPOP). The bank's self-operated deposits increased by over 100 billion year-on-year, contributing to lower funding costs [2][10]. - The report projects a future dividend yield of 4.3% for A shares and 4.9% for H shares, considering potential dilution from a private placement [2][10]. Summary by Sections Financial Performance - Q1 2025 revenue growth was -0.1%, with net profit down 2.6% and interest income down 3.8%. Non-interest income growth was robust at 14.8%, with fee income up 8.8% and other non-interest income up 21.7% [2][10]. - The bank's total assets grew by 3.5% compared to the beginning of the year, with loans increasing by 5.0%. Corporate loans rose by 9.9%, while retail loans grew by 1.4% [10]. Cost Management - The bank has initiated proactive adjustments to agency fees, resulting in a 4.6% decrease in business management expenses year-on-year, which has positively impacted PPOP growth [10]. Asset Quality - The non-performing loan (NPL) ratio increased slightly to 0.91%, while the provision coverage ratio decreased to 266%. The report indicates that the increase in NPLs is primarily due to retail sector risks [6][10]. Dividend and Valuation - The report estimates a dividend yield of 4.3% for A shares and 4.9% for H shares, with a price-to-book (PB) ratio of 0.61x for A shares and 0.52x for H shares for 2025 [10][26].

Core Viewpoint - The overall credit growth in China's banking sector has slowed from double digits to single digits, primarily due to insufficient demand, especially from the household sector. However, some regional banks in the Yangtze River Delta continue to show robust credit growth due to local economic vitality [1]. Group 1: Credit Demand and Growth - Insufficient credit demand, particularly from the residential sector, has led to a slowdown in overall credit growth in China's banking industry [1]. - Regional banks in the Yangtze River Delta, such as city commercial banks, have maintained stable credit growth due to strong local economic activity [1][2]. Group 2: Asset Scale Changes - The asset scale rankings among city commercial banks in the Yangtze River Delta have shifted, with Jiangsu Bank reaching a scale of 4 trillion yuan, surpassing Beijing Bank to become the second-largest city commercial bank in China [3]. - Ningbo Bank has overtaken Shanghai Bank, with asset totals of 3.4 trillion yuan and 3.27 trillion yuan, respectively, as of the end of Q1 [3][6]. Group 3: Q1 Performance Highlights - Q1 is typically a peak period for commercial bank lending, contributing significantly to overall credit growth. Despite a general slowdown, banks in the Yangtze River Delta achieved an average asset growth rate of 7% in Q1 [4]. - Jiangsu Bank, Ningbo Bank, Shanghai Bank, Nanjing Bank, and Hangzhou Bank reported significant asset growth, with Jiangsu Bank leading with a 12.84% increase [6]. Group 4: Interest Income and Revenue Growth - Net interest income for banks in the Yangtze River Delta has seen substantial growth, with Jiangsu Bank, Ningbo Bank, Shanghai Bank, Nanjing Bank, and Hangzhou Bank all reporting double-digit increases [8]. - The average revenue growth for city commercial banks in the Yangtze River Delta was approximately 5% in Q1, outperforming the average growth of 1.59% for listed city commercial banks [11]. Group 5: Non-Interest Income and Investment Gains - Non-interest income, particularly from investment gains, has also shown strong performance, with Jiangsu Bank, Ningbo Bank, and Nanjing Bank reporting investment income growth around 30% [12]. - Investment income has become a significant contributor to overall revenue, with some banks achieving over 100% growth in this area [13].