DBS lowered China CITIC Bank's (00998) profit forecast for this year and next two years by 11% and 16%, respectively.
The Zhitong Finance App learned that DBS released a research report saying that the asset quality outlook for China CITIC Bank (00998) is positive, mainly due to the resilient risk management and mid-term mainland economic recovery to maintain a “buy” rating. In a lower interest rate environment, profit forecasts for this year and next two years were lowered by 11% and 16% respectively. Their current price is discounted compared to the same industry, but the growth index has an advantage over peers, so it is worth a higher valuation. The target price was slightly reduced from HK$5 to HK$4.9.
According to the report, China CITIC Bank's performance last year was in line with market expectations. Net profit increased 7.9% year on year, surpassing its peers. It is expected that under the Mainland's loose monetary policy, net interest spreads will continue to be pressured this year and next two years. Profit growth is mainly driven by the gradual recovery of corporate loan demand and retail loan balances; as the scale of wealth management increases, expenses and income have increased steadily; while the ratio of non-performing loans and credit costs have declined.