China Banks Earnings: Deeper Revenue and Net Profit Declines on Lower Loan Pricing and Asset Yields

As expected, China’s state-owned enterprise banks—Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, Bank of China, and Postal Savings Bank of China—reported a year-on-year revenue decline of 2% on average in the first quarter, versus 0.6% growth in 2023. Though the contraction in net profit appeared weaker than expected when compared with the 2% growth in 2023, we expect revenue headwinds to gradually abate. Banks are on track to meet our full-year net profit growth forecast of 0.5%. We retain our fair value estimates of HKD 5 per H share for ICBC, HKD 6.20 per H share for CCB, HKD 3.50 per H share for ABC, HKD 3.50 per H share for BOC, and HKD 6.50 per H share for PSBC.