China Everbright Bank Shares Fall on Earnings Miss

By Amanda Lee

China Everbright Bank's shares fell sharply after annual profit came in well short of expectations, with the lender's bottomline hurt by weaker net interest income and a surge in fourth-quarter provisions.

Shares of the Chinese commercial lender were 11% lower at 2.30 Hong Kong dollars (US$0.29) at the midday break Thursday, taking the stock into the red for year. If the level holds, it will mark the bank's biggest one-day percentage decline since listing in Hong Kong in 2013.

China Everbright Bank said late Wednesday that 2023 net profit fell 9.0% to 40.79 billion yuan (US$5.64 billion), well short of a consensus estimate of CNY45.40 billion by a FactSet poll of analysts. Net interest income fell 5.4% to CNY107.48 billion, but also missed expectations, while net fee and commission income fell 11%.

In the fourth quarter, profit fell to CNY3.10 billion from CNY13.62 billion in the third quarter amid a surge in provisions under a new drive to tighten nonperforming loan standards.

Citi Research analysts flagged a lack of "meaningful" dividend payout percentage hike, and said asset quality outlook remains uncertain.

Still, they kept a buy rating on the stock with a target price of HK$3.02, citing resilient loan growth and "decent trading gains."

"We think the worst for CEB is over as capital constraints have eased, while stronger-than-peers' deposit growth has been a positive surprise," they wrote in a research note.

Write to Amanda Lee at amanda.lee@wsj.com

Corrections & Amplifications

This item was corrected at 0639 GMT because the company 2023 net interest income fell 5.4 percent, not rose.

(END) Dow Jones Newswires

March 28, 2024 01:22 ET (05:22 GMT)

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