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<Research>HSBC Research: Big 4 CN Banks' Capital Injection Timing Slightly Earlier than Expected; Impact to be Mixed
Recommend 33 Positive 52 Negative 21 |
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China’s Ministry of Finance and other government units will pump RMB520 billion into four state-owned Chinese banks through A-share subscriptions to bolster their core Tier 1 capital. HSBC Global Research noted that the timing of the capital injection plan is slightly earlier than anticipated. The issuance prices of the new shares are in line with or slightly below market estimates, which HSBC viewed as positive for the overall banking system and CCB (00939.HK), but negative for PSBC (01658.HK) and BANKCOMM (03328.HK). The broker foresaw a negative market reaction for both the A-shares and H-shares of PSBC and BANKCOMM, citing evident dilution of EPS and DPS. ROE may decline due to a lack of clear short-term revenue growth drivers to offset the impact, with limited room to increase payout ratios in the future. For BANK OF CHINA (03988.HK), HSBC expected a neutral or mixed market response. The scale of BOC’s capital injection is slightly below the broker’s expectations, with EPS and DPS dilution ranging from about 4% to 9%. The new capital could enable BOC to broaden its international business, thus seizing opportunities under the “China plus One” strategy. HSBC predicted a potentially positive market reaction for CCB. The capital injection is smaller than forecast, resulting in a modest EPS and DPS dilution of about 2%-4%. The plan enhances clarity in capital planning and brushes off future overhang. As the new shares are issued only in the A-share market, HSBC expected CCB’s H-shares to outperform its A-shares. AAStocks Financial News |
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