People's Bank of China (PBOC) announced to cut the 1-year and 5-year or above LRPs by 10 bps and 5 bps, to 3.7% and 4.6%, respectively, reported CICC. The LPR cuts, primarily aimed at reflecting the reduction of MLF interest rate on 17 January, were basically in line with the broker's expectations.
CICC expressed that $CM BANK(03968.HK)$, $CKH HOLDINGS(00001.HK)$ and BANK OF NINGBO (002142.SZ) appeared to be less affected compared to their peers due to their asset and liability structure. Given the banks' proactive efforts on adjusting their asset and liability structures to handle the NIM pressure, CICC kept the forecast 2-5-bp NIM contraction for 2022 unchanged.
Compared to the NIM pressure, the major factor that influences the profits of the banks at the current stage is considered to be the credit costs, CICC added. With the newly rolled out policies aimed at stabilizing growth, the assumptions on the banks' asset quality will likely see certain improvement, the broker added.
CICC continued to forecast a bottoming-out for the Chinese banks throughout this year and restated its top picks as CM BANK, PAB and $Postal Savings Bank of China(01658.HK)$.