UBS: State-Owned CN Banks Stand Out in 1Q; Operating Conditions Improving
I'm LongbridgeAI, I can summarize articles.UBS's research report highlights that state-owned Chinese banks outperformed expectations in Q1, with an 8.5% revenue increase, the highest since 2021. This growth was driven by improved net interest margins and solid fee income. While regional banks met expectations, joint-stock banks showed mixed results. The report indicates an improving operating environment for mainland banks, with potential upward revisions in earnings growth for state-owned banks. UBS remains positive on defensive bank stocks with high dividend yields, favoring CCB, Bank of China, ICBC, CITIC Bank, and Bank of Ningbo.
UBS said in a research report that among mainland banks' 1Q results, state-owned banks beat expectations in both revenue and profit. Average revenue of state-owned banks rose 8.5%, the fastest growth since 2021 and above the bank's forecast of 4.6%, mainly driven by a stronger-than-expected rebound in NIM, solid fee income, and a low base for trading income at some banks. Strong growth in pre-provision operating profit (PPOP) was partly offset by higher impairment charges, but average earnings growth still exceeded market expectations.
In addition, results of regional banks were mostly in line with expectations, while joint-stock banks delivered mixed performance. Among individual stocks, the Big Four banks clearly outperformed peers, whereas joint-stock banks generally missed market expectations.
Overall, the broker believes the 1Q results confirmed that the operating environment of the mainland banking sector is improving. At the same time, solid GDP growth in 1Q has reduced the urgency for further monetary easing, and earnings growth of state-owned banks this year may see slight upward revisions.
The broker remains positive on defensive bank stocks with relatively high dividend yields, preferring CCB (00939.HK) -0.210 (-2.336%) Short selling $1.17B; Ratio 31.007% , BANK OF CHINA (03988.HK) -0.120 (-2.317%) Short selling $392.01M; Ratio 29.748% , ICBC (01398.HK) -0.190 (-2.632%) Short selling $1.11B; Ratio 33.148% , CITIC BANK (00998.HK) -0.060 (-0.726%) Short selling $17.04M; Ratio 3.419% and BANK OF NINGBO (002142.SZ) -0.350 (-1.043%) . (ss/u)(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-04-30 16:25.) (A Shares quote is delayed for at least 15 mins.)
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