Goldman Sachs: Industrial and Commercial Bank of China (01398), China Construction Bank Corporation (00939), and BANKCOMM (03328) all reported third-quarter results in line with expectations. Goldman Sachs has raised its target price for H-shares.

Goldman Sachs released a research report stating that four mainland state-owned banks (including Industrial and Commercial Bank of China (01398), China Construction Bank Corporation (00939), BANKCOMM (03328), and Postal Savings Bank Of China (01658)) have announced their fourth quarter earnings for last year, in line with the bank's expectations. Average revenue and profit increased by 2% and 2% year-on-year respectively. Although loan growth slowed down, net interest margin stabilized on a quarterly basis, supporting flat year-on-year net interest income. Non-interest income also exceeded expectations. However, provisions increased, the non-performing loan formation rate rose, the non-performing loan provision coverage ratio continued to decline, retail asset quality pressure persisted, and rapid growth in non-mortgage retail loans could pose potential risks. Goldman Sachs adjusted the profit forecast for Industrial and Commercial Bank of China, China Construction Bank Corporation, and BANKCOMM, and slightly lowered the valuation of some A-shares to reflect the narrowing of the A-H share premium. Therefore, the target price of Industrial and Commercial Bank of China A-shares (601398.SH) and H-shares was raised by 2% and 8% respectively, to 7.71 RMB and 6.27 HKD, with a "neutral" rating. The target price of China Construction Bank Corporation A-shares (601939.SH) and H-shares was raised by 4% and 9% respectively, to 11.41 RMB and 9.01 HKD, with a "buy" rating for both. The target price of Bank of Communications A-shares (601328.SH) was lowered by 3% and H-shares were raised by 6%, to 5.9 RMB and 6.11 HKD, with a "sell" rating for both.