Daiwa: Initiates coverage on Industrial and Commercial Bank of China (01398) with a "Hold" rating, target price HK$7.8

Daiwa released a research report initiating coverage on Industrial and Commercial Bank of China (01398) with a "Hold" rating and a target price of HK$7.8, noting that ICBC is a high-dividend stock but its current price is largely reasonable. The bank expects ICBC's total operating income to grow 4% to 8% year-on-year from 2026 to 2028, with net profit growing approximately 3.1% to 6.6% year-on-year; the current price corresponds to a 2026 forecast price-to-book ratio of 0.55x. The bank pointed out that ICBC is the world's largest bank by total assets, with loans to state-owned enterprises and infrastructure accounting for 36%, giving it a defensive positioning in a credit downturn cycle; its net interest margin was 1.28% in 2025, comparable to the average of 1.29% for the four major state-owned banks, but its relatively high proportion of time deposits is conducive to a decline in funding costs as old deposits mature and are repriced, supporting a stabilization of the interest margin. The non-performing loan ratio fell from 1.38% in 2022 to 1.31% in 2025, the provision coverage ratio rose to 214%, and pre-provision operating profit can cover impairment charges by approximately 3.7 times, providing a buffer for credit costs.