China SOE Bank Earnings: Fair Value Estimates Rise for Selected Banks on Eased Asset-Quality Pressure

We have raised our fair value estimates for some of China's SOE banks after third-quarter earnings. Our fair value estimate for Agricultural Bank of China, or ABC, rises 16% to HKD 4.4; for Industrial and Commercial Bank of China, or ICBC, by 8% to HKD 5.4; and for China Construction Bank, or CCB, by 10% to HKD 6.8. This adjustment reflects our reduction in credit cost assumptions by 2 basis points-8 basis points for 2024 and 2025 after China's recent economic stimulus package. Our FVEs for the other three SOE banks, namely Bank of China, or BOC; Bank of Communications, or BoCom; and Postal Savings Bank of China, or PSBC, are unchanged.