中信银行h股a股评级下调至持有/持有：优异表现不太可能持续

China Equities CommercialBanks ChinaCiticBank(998HK/601998CH) H/A:DowngradetoHold/Hold:Outperformanceunlikelyto sustain CITICB’svaluationgapvsstate-ownedbankshaslargelyclosedfollowingsignificantsharepriceoutperformance Weseemoredownsidethanupsideriskstoassetqualityandfees;lower-than-peersCET1ratiomayconstraingrowth DowngradeH-sharestoHoldandretainHoldonA-shares;raiseH/ATPstoHKD7.20/RMB7.80(fromHKD6.80/RMB7.10) CITICB-Histhebestperformingstockunderourbankscoverageinthepastthreeyears,butisitsustainable?CITICB-H/Asurged157%/119%overthepastthreeyears(34%/20%y-t-d),materiallyoutperformingpeerbanksandindices(Exhibits1-2).CITICB’sH-sharePBreachedadecadehighof0.52x,largelyatparwithlargestate-ownedbanks’averagelevelof0.54x.ItsA-Hpremiumalsonarrowedto27%from10-yearaverageof74%. Moredownsidethanupsideriskstoassetquality.CITICB’scorporateassetqualityimprovedwithsegmentcreditcostsfellto0.6%in2024fromthe2019peakof2.2%,butthelowcreditcostsmaynotsustaingivenovercapacityconcernsandtradeuncertainties,inourview.Retailloanqualityremainsunderpressure.TheamountofpersonalNPLtransferatBankingCreditAssetRegistrationandTransferCentresurgedby761%y-o-yin1Q25.WeexpectdeteriorationinretailloanqualitytoimpactCITICBmorethanstate-ownedbanksgivenitslargernon-mortgageretailloanmix. Creditcardbusinessesmaydragfeesasconsumptiontakestimetorecover. 10June2025 H:DOWNGRADETOHOLD TARGETPRICE(HKD)PREVIOUSTARGET(HKD) 7.206.80 SHAREPRICE(HKD)UPSIDE/DOWNSIDE 7.21-0.1% (asof06Jun2025) A:MAINTAINHOLD TARGETPRICE(CNY)PREVIOUSTARGET(CNY) 7.807.10 SHAREPRICE(CNY)UPSIDE/DOWNSIDE 8.41-7.3% (asof06Jun2025) MARKETDATA BBG/RIC 998HK/0998.HK Marketcap(HKDm/USDm)481,461/61,357 Freefloat(H/A)100%/100% 3mADTV(USDm)(H/A)35/69 FINANCIALSANDRATIOS(CNY) Sectorconsumptionloangrowthrecoveredslowerthanexpectedy-t-d.ThesubduedcreditcardusagemayweighmoreonCITICB’soverallfeegrowth,ascard-relatedfeescontributedc40%ofCITICB’sgrossfeesin2024.CITICBhasthesecondlargestoutstandingWMPsas%assets(21%)asofend-2024amongbanksunderourcoverage,andtheongoingfeecutonWMPsmayposealargerimpacttothebank. Lesscapitaltofundfuturegrowth.WeexpectCITICBtomaintainamoderatelypositiveprofitgrowthin2025,butthebankmayhaveaweakergrowthcapabilitycomparedtothelargestate-ownedbanksduetoitslowerCET1ratioandRORWA,andthereforecouldunderperformintermsofassetandloangrowth.CITICBwouldalsofaceintensifiedcompetitionforqualityprojectsanddepositsfromstate-ownedbankpeersassector-levelriskappetitedecreasesamiduncertainties. DowngradeCITICB-HtoHoldfromBuyandmaintainHoldonA-shares.CITICB- Yearto12/2024a12/2025e12/2026e12/2027e HSBCEPS 1.22 1.17 1.18 1.22 HSBCEPS(prev) 1.22 1.17 1.21 1.25 Change(%) 0.0 -0.2 -2.6 -2.4 ConsensusEPS 1.25 1.25 1.30 1.37 Source:LSEGIBES,HSBCestimates YiweiLiu* Associate,ChinaBanks TheHongkongandShanghaiBankingCorporationLimitedyi.wei.liu@hsbc.com.hk +85229966635 GaryLam*,CFA HeadofGreaterChinaFinancialsResearch TheHongkongandShanghaiBankingCorporationLimitedgary.lam@hsbc.com.hk +85229966926 Hmateriallyoutperformedpeersandmajorindicesoverthepastthreeyears,butwe thinktheoutperformanceisunlikelytosustain.WeseedownsiderisktoCITICB’sassetquality,retailbusinessandfees.Thelower-than-peersCET1ratiomayconstrainCITICB’sfuturegrowthcapability.Thatsaid,westilllikeCITICB’scatch-uppotentialinwealthbusiness.Wecut2025/26/27eEPSby0.2%/2.6%/2.4%;ourrevisedEPSestimatesare6.9%/10.7%/9.7%belowBloombergconsensus,andweseethepossibilityofdownwardrevisiontoconsensus.WelowerourcredibilitydiscountassumptionsforitsH/A-shares;ournewTPsareHKD7.20/RMB7.80(fromHKD6.80/RMB7.10).Seepage6forfullvaluationandrisks. *Employedbyanon-USaffiliateofHSBCSecurities(USA)Inc,andisnotregistered/qualifiedpursuanttoFINRAregulations HSBCGlobalResearchPodcasts Listentoourinsights Findoutmore Disclosures&Disclaimer ThisreportmustbereadwiththedisclosuresandtheanalystcertificationsintheDisclosureappendix,andwiththeDisclaimer,whichformspartofit. Issuerofreport:TheHongkongandShanghaiBankingCorporationLimited ViewHSBCGlobalResearchat: https://www.research.hsbc.com Financials&Valuation:CITICB 998HKYearto Hold 2024a TP 2025e HKD 2026e 7.202027e 601998CHYearto Hold 2024a TP 2025e RMB 2026e 7.802027e H-sharevaluation(x) A-sharevaluation(x) P/E 5.4 5.7 5.6 5.4 P/E 6.9 7.2 7.2 6.9 P/PPOP 2.4 2.7 2.6 2.6 P/PPOP 3.1 3.4 3.3 3.3 P/B 0.5 0.5 0.5 0.4 P/B 0.7 0.6 0.6 0.6 Dividendyield 5.4% 5.4% 5.4% 5.7% Dividendyield 4.2% 4.2% 4.3% 4.4% Assetquality(%) Financialratios(%) Creditcost 0.94 0.87 0.86 0.81 NIM 1.77 1.61 1.54 1.51 NPLratio 1.2 1.2 1.2 1.2 Non-intinc/revenue 31.2 31.6 31.9 31.0 LLRratio 2.43 2.38 2.38 2.40 Cost/income 33.7 34.4 34.5 34.6 NPLcoverage 209 203 203 207 Loan/deposit 97.5 96.7 96.4 96.6 Capitalratios(%) Loans/assets 60.0 59.8 59.7 59.8 CoreTier1 9.7 9.6 9.5 9.5 IEA/assets 89.4 90.2 90.2 90.2 TotalTier1 11.3 11.0 10.8 10.7 ROA 0.69 0.66 0.62 0.61 TotalCAR 13.4 13.0 12.9 12.7 ROE 9.9 9.1 8.7 8.5 RWA/assets 74.2 75.6 75.9 75.9 Leverage(x) 11.8 11.9 12.0 12.1 P&L(RMBbn) Growthy-o-y% Netinterestincome 147 143 145 151 Netinte