Bank of China (601988): Stable performance of deposit growth maximizes ideal; low estimates increase stock attractiveness

Bank of China (601988): Stable performance of deposit growth maximizes ideal; low estimates increase stock attractiveness

2018 results are in line with expectations. Bank of China’s annual results for 2018: operating income of US $ 503.8 billion, a gradual increase4.

1%; net profit attributable to parent company is USD 180.1 billion, an annual increase of 4.

5%, the corresponding profit after excluding preferred stock dividends is 0.

59 yuan.

Overall performance was in line with expectations, and debt grew faster than comparable peers.

Development Trends In 2018, the operation of the Bank of China remained stable, and the specific performance was as follows: 1) The interest rate spread kept expanding.

The average daily average net interest margin in 2018 was 1.

90%, an increase of 6bp per year, mainly due to the faster return on the asset side than the cost.

The average daily net interest margin of each of the four quarters in our budget is one each.

85%, 1.

90%, 1.

94%, 1.

96%, showing an upward trend during the quarter 2) The asset quality is stable, and the proportion of overdue loans has improved significantly from the previous quarter.

The end-of-period adverse rate decreases by 3bp to 1 every year.

42%; Concerned loans accounted for 2%.

90%, previous / QoQ drop by 1 / 3bp; overdue loans accounted for 1.

87%, higher than roughly the same, a significant improvement of 55bp from the previous quarter.

Initial credit cost is 0.

95% (displayed value), increased by 14bp; end-of-term provision coverage ratio was 182%, increased by 23.

2ppt, increase provision ratio, and consolidate asset quality.

3) Capital 上海夜网论坛 adequacy ratio improved.

Core tier 1 capital and capital adequacy ratio at the end of the period11.

41% and 14.

97%, benefiting from the smooth progress of the capital replenishment plan in the second half of the year, which is increased by 26bp and 78bp annually.

4) The scale of assets and liabilities has grown steadily.

Total assets, loans, and deposits have grown by 9 each year.

2%, 8.

2% and 9.

0%, a quarter-on-quarter increase of 1.

5%, 0.

8% and 1.

9%, the overall growth is stable, the growth rate of deposits exceeded the ideal, ahead of comparable peers.

Earnings forecast remains unchanged from Bank of China’s 2019/20 earnings forecast.

Estimates and recommendations of company A / H currently correspond to 0.


57 times 2019e P / B, maintaining A / H recommendation level.

The stock maintains a target price of RMB 5.

09, corresponding to 0.92x 2019e P / B and 35% growth space; H shares maintain target price reconstruction5.

44, which corresponds to 0.

87x 2019e P / B and 53% growth space.

Considering that Bank of China has the lowest estimate among its peers and denies solid growth, investors are advised to buy.

The demand for risk credit has fallen significantly; the competition for deposits has been stimulated.

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