not vested
China Construction Bank 中国建设银行 (939 HK)
China Construction Bank’s (CCB) net interest margin has improved on the back of better yields from corporate loans, up 2bp qoq in 1Q17 despite an increase of time deposits that raise the cost of capital.
CCB has conservatively classified loans that are more than 60 days overdue as nonperforming loans (NPLs).
It is more stringent than regulatory requirement of 90 days, allowing CCB to enjoy an extra buffer.
NPL formation has receded from Rmb150b in 2016 to Rmb25b in 1Q17.
Management plans to increase contributions from non-interest income, up 2ppt to 32.8% in 1Q17.
We set our target price of HK$7.36 based on 1.19x 2017F P/B and suggest a BUY rating.
http://en.ccb.com/en/home/indexv3.html
Source: UOBKH