＜Research＞HSBC Research: CN Banks' Surprise Cut in Deposit Rates; CCB (00939.HK), ICBC (01398.HK), BANK OF CHINA (03988.HK), CM BANK (03968.HK), HKEX (00388.HK) Preferred

　　HSBC Global Research released a report on the recent deposit rate cuts by major banks in China, which the broker considered a positive surprise. Among them, demand deposit rates, though already at a low level, still have room to go down. The reduction in 2-5 year time deposit rates exceeded the loan prime rate (LPR) cuts, so the broker projected that the pass-through of deposit costs from the LPR cuts could be close to 50%-100%, up from 25% as originally expected.

　　HSBC assumed that a 50% pass-through scenario would have an about 1 to 2 bps impact on the net interest margins (NIMs) of Mainland banks, or a reduction in profits of between 1% and 2.3%. In a 100% pass-through scenario, banks' NIM could widen by around 1 to 4 bps as deposit balances are larger than loan balances, driving profit growth of around 1% to 5%.

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　　HSBC believed that the NIM pressure on Chinese banks is likely to be less than the market expected after operations by the People's Bank of China (PBOC). The broker preferred CCB (00939.HK) -0.020 (-0.369%) Short selling $430.42M; Ratio 31.968% , ICBC (01398.HK) -0.020 (-0.461%) Short selling $336.18M; Ratio 34.939% , BANK OF CHINA (03988.HK) -0.030 (-0.880%) Short selling $187.45M; Ratio 49.442% and CM BANK (03968.HK) -0.500 (-1.555%) Short selling $47.14M; Ratio 13.775% , with target prices of $7.3, $5.5, $4.2 and $46.5 respectively, and all of them are rated Buy.

　　In addition, HSBC is optimistic that HKEX (00388.HK) -0.200 (-0.087%) Short selling $120.31M; Ratio 26.311% can benefit from the potential recovery of the IPO market. The broker maintained a target price of $312 and a Buy rating on the stock.

　　(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2024-07-26 12:25.)

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