China Joint-Stock Bank Earnings: NIM Pressure to Persist in 2025, Fair Value Estimates Maintained

We maintain our fair value estimates for China Citic Bank, China Industrial Bank, or CIB, and China Minsheng Bank at HKD 5.90, CNY 18.50, and HKD 3.60, respectively, following their in-line 2024 results. With 5.5% to 6.5% dividend yields and trading at 0.5 times book value for Citic and CIB and 0.3 times book value for Minsheng, we think these banks are fairly valued after their average 10% year-to-date share price gain. Citic and CIB reported positive surprises, with dividend per share increasing 9% and 2%, respectively, outpacing their net profit growth of 2% and flat. However, Minsheng’s dividend per share contracted by 11%, slightly more than its 10% net profit decline. We expect the payout ratio to remain above 30% in 2025, as encouraged by the regulator, and the earnings outlook to stay positive.