PAB reported FY19 net profit of RMB 28.2bn, up 13.6% YoY and in line with itspreliminary earnings announcement. Key results positives are stable NIM, lowerCIR, stricter NPL recognition, and higher dividend payout. We remain upbeat onPAB’s growth prospects and see major catalysts from: 1) continued better-thanpeers NIM and asset quality trend, thanks to greater retail exposure; 2)successful transformation in corporate banking, with support from Ping AnGroup; and 3) management’s boost for wealth management business, in orderto make up the long-standing weakness in funding cost.
Results positives: 1) Loan growth accelerated to 8.0% in 4Q19, ascapital was replenished after the conversion of RMB 26bn CB in 3Q19.Corporate loan growth picked up to 10% QoQ, driving a strong depositgrowth of 6.3% QoQ. 2) NIM remained stable QoQ at 2.62%, as 10bpdecline in loan yield was offset by 8bp/3bp retreat in deposit/interbankfunding costs; 3) 4Q19 cost-income ratio fell 2.5ppt YoY to 31.1%,indicati