[ET Net News Agency, 6 April 2020] Jefferies Research initiated coverage on Postal
Savings Bank of China (PSBC)(01658) with a "hold" rating and a target price of HK$4.54.
The research house said PSBC is likely to see worse-than-peers PPOP (pre-provision
operating profit) growth in 1H due to more NIM (net interest margin) contraction and
slower personal loan growth.
Jefferies is less concerned about PSBC's short-term credit cost - it is unlikely to
significantly increase off a high base thanks to its high provision. But lower-than-peers
core-tier-1 CAR (capital adequacy ratio) and ROA (return on assets) is its biggest concern
in the long run and PSBC is likely to suffer more in the case of small banks'
defaults/takeover/restructure.
It believes PSBC is more likely to outperform peers amid liquidity tightening, given
strong deposit and more loan quota, but 2020 is just the opposite, and it is likely to see
less premium versus Big-4 banks. (KL)
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01658 PSBC
Nominal 
4.000 -0.100 (-2.439%) Research Report
06/04/2020 16:36
{I-bank focus}Jefferies starts PSBC (01658) at HK$4.54
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