China CITIC Bank 1Q15 earnings edge up 2.1% to RMB10.9b

There's also rising appetite for interbank business.

China CITIC Bank’s 1Q15 earnings were up 2.1% YoY to RMB10.9b.
According to a research note from CCB International, further, PPOP achieved 10.0% YoY growth, driven by robust fee income (32.7% YoY), likely contributed by bank card and WMP services.

Credit cost rose 18bp YoY and 8bp QoQ to 118bp in 1Q15, reflecting proactive provisioning.

After a steady rise, the bank’s NPL ratio was up 5bp QoQ; in 2014 it was up 27bp YoY.

The note also said that there is rising appetite for interbank business. Assets were up 7% QoQ driven by CITIC’s rapid expansion in receivables investment, up 39.7% QoQ to RMB912.7b. CITIC’s appetite for interbank business is
greater than Minsheng’s, whose receivables investments accounted for only 6.6% of total assets versus CITIC’s 20.6% in 1Q15.

Here's more from CCB International:

Capital adequacy boosting plan in progress. The bank’s RMB11.9b placement to China Tobacco and RMB35b preference share issuance are likely to be completed in 2015 and, in our view, will boost its Tier-1 capital ratio by 35bp and 103bp, respectively, which should remove a capital overhang.

We maintain our Outperform rating on the stock due to its cheap valuation and raise our target price from HK$8.09 to HK$9.15 to reflect higher ROE (from 12.0% to 12.5%) and lower COE assumption (from 12.0% to 11.4%).

The new target is equivalent to 1.13x 2015F P/B. CITIC Bank’s valuation is still at a large discount to CMB (1.35x 2015F P/B) and Minsheng (1.1x 2015F P/B), and is cheaper than many of the city commercial banks like BCQ (0.94x 2015F P/B). The valuation gap is likely to narrow, in our view.