Ping An Bank’s Preliminary Q4 Earnings Strong, but Revenue Growth Disappoints

In its preliminary results report, no-moat Ping An Bank, or PAB, saw better-than-expected fourth-quarter earnings growth of 23% year on year, leading to 2022 net profit of CNY 45,516 million, but with disappointing 6% top-line growth. The lower provisioning has helped offset softening revenue. This is not unique to PAB, with China Merchants Bank, or CMB, also indicating a similar trend. We believe the weak bond market and overall low consumer and investment activity, which are the key drags to 2022 revenue growth, should recover in 2023. As such, we leave our major assumptions unchanged and retain our fair value estimate for PAB at CNY 19 per A-share.