Company Reports

Ping An Bank's second-quarter year-on-year revenue growth slowed to 1.8%, while net profit growth improved to 3.3% on lower expenses and provisions.

Ping An Bank's first-quarter year-on-year revenue and net profit growth of 5% and 3%, respectively, marked its first return to positive growth since 2022.

Ping An Bank's 2025 revenue growth and net profit decelerated to 10% and 4%, respectively, due to lower trading gains amid increased bond market volatility, offsetting fourth-quarter net interest income growth, which turned positive for the first time since 2023.

Ping An Bank has evolved into a retail-centric franchise, leveraging parent Ping An Insurance's brand equity and omnichannel platform to tap its 238 million financial customers (versus PAB's 126 million retail base). Through 2022, five retail pillars—credit cards, consumer loans, wealth products, bancassurance, and mortgages—scaled rapidly. However, deteriorating credit cycles and weak demand since 2022 prompted a strategic reset: shifting from scale to quality, prioritizing profitability, and risk management. Beyond capital-light retail initiatives—customer tiering, deposit optimization, and digital integration—PAB is now bolstering corporate banking for strategic sectors (advanced manufacturing, green finance) and enhancing interbank operations to mitigate duration mismatch.

Industrial and Commercial Bank of China held an Investor Day on Nov. 26, highlighting recent trends in net interest margin, or NIM, demand from corporate and inclusive finance sectors, and potential in the overseas banking segment.

Ping An Bank's year-on-year declines in net interest income and fee income narrowed to 8% and zero, respectively, for the first nine months. Revenue and net profits growth are largely flat due to weaker investment income amid unfavorable bond market movement.

Ping An Bank's interim revenue and net profit contracted 10% and 4% year over year, respectively, but the pace of decline narrowed thanks to recovery in fee income and lower expenses.

Ping An Bank has transformed into a retail-focused bank, leveraging parent Ping An Insurance Group's reputable brand and integrated online/offline platform to smoothly migrate the group’s premium customer base of 238 million financial customers, versus PAB’s 126 million retail customers. In the past few years, PAB's five key retail products—credit cards, consumption loans, wealth management products, bancassurance products, and home mortgage loans—have grown rapidly in scale. However, due to the worsening credit cycle and anemic credit demands amid a slowing economy since 2022, PAB started another round of transformation and asset cleanup. It shifted its strategic priorities from scale-driven growth to quality-first growth, focusing on profitability and risk management in retail banking. Besides its efforts to build capital-light retail operations via customer tiering, deposit cost optimization, and digital ecosystem integration, PAB now also focuses on strengthening corporate banking to serve key strategic customers in sectors including advanced manufacturing and green finance, and enhancing interbank operations to reduce the risk of duration mismatch amid market volatility.

China will reinstate a 6% value-added tax on interest income from treasury bills, local government bonds, and financial institution notes issued after Aug. 8. These had been exempt since 2016.

We have updated our cost of equity assumption for Ping An Bank to reflect recent industry developments, including weaker-than-expected year-to-date loan growth, a modest May interest rate cut, and policies to curb pricing competition among banks.

Ping An Bank has transformed into a retail-focused bank, leveraging parent Ping An Insurance Group's reputable brand and integrated online/offline platform to smoothly migrate the group’s premium customer base of 238 million financial customers, versus PAB’s 126 million retail customers. In the past few years, PAB's five key retail products—credit cards, consumption loans, wealth management products, bancassurance products, and home mortgage loans—have grown rapidly in scale. However, due to the worsening credit cycle and anemic credit demands amid a slowing economy since 2022, PAB started another round of transformation and asset cleanup. It shifted its strategic priorities from scale-driven growth to quality-first growth, focusing on profitability and risk management in retail banking. Besides its efforts to build capital-light retail operations via customer tiering, deposit cost optimization, and digital ecosystem integration, PAB now also focuses on strengthening corporate banking to serve key strategic customers in sectors including advanced manufacturing and green finance, and enhancing interbank operations to reduce the risk of duration mismatch amid market volatility.

Ping An Bank's, or PAB's, first-quarter revenue and net profit contracted by 13% and 6% year over year, versus the respective 11% and 4% declines in 2024. Shares fell 1.4% on the day following the announcement.

No-moat Ping An Bank's 2024 revenue and net profit contracted 11% and 4%, respectively, even after the nine-month profit had been up 0.2% year on year. We lower our fair value estimate to CNY 12 per share from CNY 13 as we factor in a 7-basis-point and 4-basis-point decline in 2025 and 2026 net interest margin. The stock is slightly undervalued, trading at 0.5 times 2025's price/book value ratio.

Ping An Bank has transformed into a retail-focused bank, leveraging the Ping An Group parent company’s reputed brand and its integrated online/offline platform to smoothly migrate the group’s premium customer base of 238 million financial customers, versus PAB’s 126 million retail customers. In the past few years, PAB's five key retail products, consisting of credit cards, consumption loans, wealth management products, bancassurance products, and home mortgage loans, have grown rapidly in scale. However, due to worsening credit cycle and anemic credit demands amid a slowing economy since 2022, PAB started another round of transformation and asset clean-up. It shifted its strategic priorities from scale-driven growth to quality-first growth, focusing on profitability and risk management in retail banking. Besides its efforts to build capital-light retail operations via customer tiering, deposit cost optimization and digital ecosystem integration, PAB now also focuses on strengthening corporate banking to serve key strategic customers in sectors including advanced manufacturing and green finance, and enhancing interbank operations to reduce the risk of duration mismatch amid market volatility.

Ping An Bank has transformed into a retail-focused bank, leveraging the Ping An Group parent company’s reputed brand and its integrated online/offline platform to smoothly migrate the group’s premium customer base of 238 million financial customers, versus PAB’s 126 million retail customers. In the past few years, PAB's five key retail products, consisting of credit cards, consumption loans, wealth management products, bancassurance products, and home mortgage loans, have grown rapidly in scale. However, due to worsening credit cycle and anemic credit demands amid a slowing economy since 2022, PAB started another round of transformation and asset clean-up. It shifted its strategic priorities from scale-driven growth to quality-first growth, focusing on profitability and risk management in retail banking. Besides its efforts to build capital-light retail operations via customer tiering, deposit cost optimization and digital ecosystem integration, PAB now also focuses on strengthening corporate banking to serve key strategic customers in sectors including advanced manufacturing and green finance, and enhancing interbank operations to reduce the risk of duration mismatch amid market volatility.

We maintain our fair value estimates for six Chinese banks—Bank of Communications, or BOCOM, Postal Savings Bank of China, or PSBC, China Minsheng Bank, or Minsheng, China Industrial Bank, or CIB, Ping An Bank, or PAB, and Bank of Ningbo, or BONB.

We maintain our fair value estimate for Ping An Bank at CNY 13 per share following its third-quarter announcement, which revealed a slowdown in net profit growth to 0.2%, down from 1.9% year on year in the first half. Year-on-year declines in net interest income and fee income of 18% and 13% respectively, were smaller than the first half and met expectations. These results show rising industry challenges, including slowing consumer spending, weakening credit demand, and deteriorating retail credit quality.

We lift our fair value estimate for Ping An Bank, or PAB, to CNY 13 per share from CNY 12 to factor in 3- and 5-basis-point increases in our net interest margin, or NIM, forecasts in 2024 and 2025, following management’s more upbeat business outlook. First-half results are on track to meet our 2024 net profit growth estimate of 1.30%. Though revenue continues to contract year on year by 13% versus a 14% decline in the first quarter, net profit growth remains positive at 1.9%. We think the bank is undervalued, trading at 0.45 times 2024 price/book ratio and a 7% dividend yield. While we prefer China Merchants Bank, China Construction Bank, and Industrial and Commercial Bank of China on higher earnings visibility and stable dividends, we believe PAB remains a high-quality bank among our coverage. PAB’s first interim dividend of CNY 2.46 per 10 shares implies payout ratio of 18.5% versus 30% for full-year 2023, but management hinted an upside potential for the full-year payout, which we expect to be in the 20%-30% range. We believe its high dividend yield of 7% versus 3%-5% for peers and improved earnings visibility should support its share price. We expect PAB to be rerated when China’s property market or consumer sentiment recover, given its more cyclical asset mix.

Ping An Bank, or PAB, has been transforming into a retail-focused bank. While we believe it has yet to earn a moat, we believe PAB is a high-quality bank among our Chinese bank coverage. We’re positive on its restructuring, thanks to its ability to leverage its parent’s huge customer base and integrated offline and online financial platform.

Driven by improved investor sentiment for China banks with stable dividend payments and a historic property rescue package introduced in May, the Hang Seng Mainland Banks Index rallied over 20% in the second quarter. But it pulled back sharply on profit-taking and investors’ concerns that the easing measures were not sufficient to turn around struggling property sales. H-shares of most China banks remain undervalued, with 2024 price/book modestly increasing to 0.2-0.5 times. Dividend yields remain attractive at 6%-8%. With A-share counterparts trading at a 35% premium to H-shares on average, we expect the regulators’ push for higher and more regular dividend payouts, as well as the expansion of eligible exchange-traded funds on Stock Connect, should gradually narrow the valuation gap for Chinese dual-listed banks. Amid sluggish economic growth in China with no major recovery in property sales and consumer spending anticipated in 2024, we prefer defensive state-owned banks, including China Construction Bank, or CCB, and Industrial and Commercial Bank of China, or ICBC, and leading retail-focused bank China Merchants Bank for stable dividends, strong capital returns, and better earnings visibility.