Ping An Bank's Q4 2022 Posted Positive Year-Over-Year Growth in Fee Income

No-moat Ping An Bank, or PAB, reported 2022 revenue growth of 6.2% and net profit growth of 25.3% year on year, in line with its preliminary results. The results were mixed. We are pleased to see that fourth-quarter fee income growth turned positive year on year and the number of wealth customers and asset under management, or AUM, continued a fast expansion, despite escalating economic challenges in the last quarter of 2022. However, fourth-quarter net interest margin, or NIM, reported larger-than-expected contraction by 10 basis points to 2.68% from the third quarter. We expect such downward pressure will continue into the first quarter but should gradually mitigate after the second quarter. We lower our 2023 NIM assumption by 2 basis points to 2.65%, but the negative valuation impact is offset by lower 2023 credit cost of 4 basis points, thus leaving to our fair value estimate for PAB unchanged at CNY 19 per A share.