[ET Net News Agency, 22 September 2020] UBS Global Research lowered its target price
for Postal Savings Bank of China (PSBC)(01658) to HK$3.5 from HK$5.8 and downgraded its
rating from "buy" to "neutral".
The research house doesn't expect the bank to deliver higher-than-peer profit growth in
the current environment. Its NIM is likely to remain under pressure due to the financial
sector's policy support for the real economy, while profit growth may be managed in line
with that of other SOE peers, at least in the near term.
UBS thinks the bank is unlikely to re-rate to previous valuation levels unless there is
more visibility that it can differentiate from peers with a resumption of double-digit
profit growth. It revised down its EPS estimates by 19%/24.9% in 2020-2021 to reflect the
slower PPoP (pre-provision operating profit) growth from NIM (net interest margin)
contraction and weaker fee growth from Rmb1.5trn income sacrifice to support the real
economy. (KL)