A new report from HSBC securities maintains a “hold” recommendation for China Merchants Bank (600036) while raising profit forecasts its target price.
According to the report CMB’s indicates that it will maintain a dividend ratio of at least 30% for the first quarter of the year has improved the market’s attitude towards state-owned banks.
While the bank has improved the quality of its assets and expunged must risk from its balance sheet, this has come at the cost of next spreads.
HSBC has raised its profit forecast for CMB over the next two years from 4% to 6%, as well as increased the target price from HKD21.8 to HKD22.9.