JP Morgan: Lowered target price of Agricultural Bank of China (01288) to HK$6.55, maintains "overweight" rating.

JPMorgan Chase released a research report stating that it has rolled over the valuation endpoint of Agricultural Bank Of China (01288) to December 2027, and as a result, has lowered its target price from 7.2 Hong Kong dollars to 6.55 Hong Kong dollars, while maintaining a "overweight" rating. The bank has updated the model of Agricultural Bank Of China to reflect its first quarter performance in 2026, and has lowered its profit forecasts for Agricultural Bank Of China for the years 2026 to 2028 by 1.6%, 3.7% and 5.6% respectively, mainly due to deterioration of the loan portfolio leading to expectations of narrowing net interest margins by 2, 5, and 4 basis points respectively. JPMorgan Chase pointed out that the asset quality of Agricultural Bank Of China is improving, with its non-performing loan coverage ratio being the highest among the four major state-owned banks, providing more cushion for future profits. At the same time, Agricultural Bank Of China has the lowest overseas exposure among the four major state-owned banks, and therefore is less affected by the risk of overseas market downturn. However, the capital position of Agricultural Bank Of China is relatively weak compared to the four major state-owned banks, with its Common Equity Tier 1 (CET 1) ratio lower than its peers, and higher growth in risk-weighted assets (RWA).