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2009-7-2 10:10:00 a.m. HKT, XFNA
DJ MARKET TALK: UBS Downgrades H-Shr Bks; Growth To Slow From '10
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| 0949 [Dow Jones] STOCK CALL: UBS says H-Share banks' growth to slow from 2010; "Based on expected lower GDP growth, a weak trading surplus and more active financial asset allocation by depositors, H-share banks' deposit growth could slow from 28% in 2009E to 15% in 2012E." Notes, 30% of Chinese banks' deposit growth has been driven by country's trade surplus. Estimates mild credit cycle will push H-share banks' 2009-12 average credit cost to 103 bps (2004-08 average of 71 bps), ROAA may fall from 1.19% in 2008 to 1.02% in 2012E on 14% 2008-12E profit CAGR (32% in 2004-08). Downgrades China Construction bank (0939.HK), Citic Bank (0998.HK), China Merchants Bank (3968.HK) to Neutral from Buy; cuts Bank of Communications (3328.HK) to Sell from Neutral. Lowers sector earnings forecasts aggregate 8% in 2011 after assuming credit costs will peak in 2011. Adds, "as the global economic outlook is uncertain, the credit cycle could be more severe than our base-case scenario. (MAA) Contact us in Hong Kong. 852 2802 7002; MarketTalk@dowjones.com
(Delayed by 1 hour)
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