Bank of America Securities: Lowering Minsheng Bank's (01988) target price to HK$3.34 to maintain “outperforming the market” rating

The Zhitong Finance App learned that Bank of America Securities released a research report stating that Minsheng Bank (01988) lowered its profit forecast by 1% to 5% from 2026 to 2028 in response to performance and provision pressure. The bank believed that the profitability of the private bank was low and that the reserve pressure continued. The bank maintained a “outperforming market” rating. The target price for H shares was lowered from HK$3.53 to HK$3.34, and the target price for A shares (600016.SH) was lowered from RMB 3.5 to RMB 3.32.

Minsheng Bank's pre-provision operating profit (PPOP) rose 6.4% year-on-year in the first half of this year. The growth rate was the same as the first quarter, and 2.5% higher than the bank's forecast, mainly driven by stronger than expected net interest income and net interest spread. However, net profit fell 8.6% year-on-year, lower than the forecast of 2.5%, mainly due to the 20.2% year-on-year increase in overall provision. According to the report, the return on shareholders' equity (ROE) for the first half of the year fell 1.1 percentage points year on year to 6.1%, and the core Tier 1 capital adequacy ratio fell 9 basis points year on year, but rose 7 basis points from quarter to month to 9.42%. The interim dividend was RMB 0.118 per share, down 13.2% year-on-year, and the dividend ratio fell 0.2 percentage points year-on-year to 29.8%.