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<Research>UBS Remains Constructive on CN Banks, Upbeat on CMB/ CITIC/ CCB/ BOC
Recommend 105 Positive 183 Negative 82 |
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UBS noted in a report that the People's Bank of China (PBOC) announced plans to set up a RMB300 billion affordable housing refinancing facility as a new monetary policy tool to support local SOEs in purchasing homes for affordable housing. The interest rate will be set at 1.75%, with a one-year maturity that can be rolled over up to 4 times. The RMB300 billion of loans will account for 60% of total lending by 21 banks, including policy banks, large state-owned banks and joint-stock banks, implying a total of RMB500 billion of funding. It's worth noting that purchases will be limited to completed but unsold homes. Banks will be expected to make lending decisions independently and at their own risk, and property developers will be able to use sales proceeds to build stalled projects. UBS believed that banks may be more willing to participate this time around. Firstly, instead of real estate developers and project companies, the borrowers this time will be local SOEs or local government financing vehicles, which may be supported by the local government. Secondly, the broker expected the interest rate of the loan may reach about 3-3.5%. Thirdly, with the sales proceeds available for the stalled projects, it is estimated that the lenders could recover potential losses of over RMB700 billion upon completion and delivery of the stalled projects. The broker maintained a constructive view on mainland banks as policy rollout appears to be accelerating, market valuations have already factored in negative catalysts and a bearish outlook for the sector, and attractive dividend yields provide protection on the downside. UBS preferred CM BANK (03968.HK) and CITIC BANK (00998.HK), which could see more upside if market sentiment improves further. Among large state-owned banks, CCB (00939.HK) and BANK OF CHINA (03988.HK) are preferred. AAStocks Financial News |
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