Komo: The second-quarter results of state-owned domestic banks beat expectations and the regular dividend payout ratio increased for the first time

The Zhitong Finance App learned that Motong released a research report saying that the second-quarter results of state-owned domestic banks beat market expectations. Average revenue and profit increased 9% and 6% year over year, far ahead of the 1% increase and 9% decline of joint-stock banks. Furthermore, state-owned banks raised their interim dividend payout rate by 1 percentage point. Although not significant, this is the first time since listing that the regular dividend rate has been raised, which is a positive sign for shareholder returns.

Within the scope of the bank's coverage, Postbank (01658) had the largest margin of profit over the forecast, reaching 6%, while the most disappointing was Everbright Bank (06818), which was 37% lower than the bank's forecast, followed by Huaxia Bank (600015.SH) and Industrial Bank (601166.SH). In this context, the bank continues to expect state-owned banks to outperform joint stock banks.

The bank upgraded the Postbank rating from “neutral” to “overweight” and raised the target price from HK$5.1 to HK$5.9. Industrial Bank was downgraded from “increasing holdings” to “neutral,” and Huaxia Bank was downgraded from “neutral” to “reducing holdings.” Within the scope of domestic bank stocks, Bank of China (03988) and China Construction Bank (00939) are still the first choice. The target prices are HK$6.15 and HK$10.1, respectively, and they maintain an “increase in holdings” rating for all state-owned banks.