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01658 PSBC
RTNominal up4.040 +0.050 (+1.253%)
Others

25/09/2020 17:06

{I-bank focus}HSBC cuts PSBC (01658) to HK$4; "buy" now

[ET Net News Agency, 25 September 2020] HSBC Global Research lowered its target price
for Postal Savings Bank (PSBC)(01658) to HK$4 from HK$4.8 but upgraded its rating to "buy"
from "hold".
The research house said PSBC now offers value after a 37.8% share price correction from
its peak in June 2020. PSBC now trades at 0.47x 2020 PB, while it generates a 10% ROE
2020-22.
HSBC noted three key positive catalysts: (1) PSBC obtained 66% of deposits through China
Post Group with an average agency fee rate of 1.32% in 2019. As the deposit benchmark rate
and the market rate have declined since the last agency fee rate adjustment in 2H 2013,
any agency fee rate reduction would benefit PSBC's earnings; (2) PSBC is the only sizeable
state-owned bank that has not adopted an Internal Rating Based (IRB) approach for credit
risk weighting assessment; examples from peers suggest a successful adoption could lead to
3-7% of RWA (risk-weighted asset) savings; (3) PSBC has a higher-than-peers % exposure in
interbank & bond investments; each 10bp improvement in the interbank & bond yield could
theoretically benefit earnings by 6.4%. (KL)

Remark: Real time quote last updated: 23/10/2020 17:59
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