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<Research>HSBC Research: PBOC Rate Cut Expectations Within Yr Lower; CN Banks' NII Seen Expanding; ICBC, CCB, BOC H Shrs Preferred
HSBC Global Investment Research noted in a report that the People's Bank of China (PBOC) removed the wording on "potential RRR or rate cuts" in its 1Q26 monetary poli...
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<Research>HSBC Research: PBOC Rate Cut Expectations Within Yr Lower; CN Banks' NII Seen Expanding; ICBC, CCB, BOC H Shrs Preferred
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HSBC Global Investment Research noted in a report that the People's Bank of China (PBOC) removed the wording on "potential RRR or rate cuts" in its 1Q26 monetary policy report. This moderated market expectations for any Loan Prime Rate (LPR) cuts during the remainder of 2026.

Starting from 3Q26, banks are urged not to let "high interest rate" interbank time deposits account for more than 10% of the total. Such "anti-involution" policies will reduce price competition among banks, leading to a moderate decline in funding costs. The banks covered by the broker had an average interbank funding cost of 1.76% in 2H25, while one-week to one-year SHIBOR stood at around 1.3-1.5%, indicating considerable room for decline. ICBC (01398.HK)  -0.010 (-0.147%)    Short selling $149.29M; Ratio 13.481%   and BANKCOMM (03328.HK)  +0.020 (+0.279%)    Short selling $70.61M; Ratio 43.291%   may benefit more.

Corporate banking of Chinese banks continued to outperform retail: (1) TSF data for April 2026 confirmed positive MoM growth in corporate loans, while retail loans were negative, likely due to weakness in credit cards and mortgages. (2) As more time deposits are reallocated to wealth management products, insurance products and mutual funds, deposit competition may intensify. Banks with high loan-to-deposit ratios may face pressure first, such as MINSHENG BANK (01988.HK)  +0.010 (+0.291%)    Short selling $9.56M; Ratio 21.938%   , CITIC BANK (00998.HK)  -0.040 (-0.537%)    Short selling $36.14M; Ratio 17.012%   and CEB BANK (06818.HK)  +0.010 (+0.331%)    Short selling $3.96M; Ratio 21.297%   .

Among Chinese bank stocks, the broker preferred ICBC H shares, CCB (00939.HK)  +0.010 (+0.115%)    Short selling $662.66M; Ratio 29.841%   , BANK OF CHINA (03988.HK)  -0.010 (-0.192%)    Short selling $269.13M; Ratio 23.981%   and CMB (600036.SH)  +0.080 (+0.216%)   . Industry developments reinforce its conviction that, supported by sustained NII expansion, stronger fee income and favorable policies, price-to-earnings and price-to-pre-provision profit ratios may see re-rating.
(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-05-26 16:25.) (A Shares quote is delayed for at least 15 mins.)

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