Ping An Bank Earnings: Net Profit Growth Eases but Headwinds Should Diminish

Ping An Bank’s first-quarter net profit growth slowed to 13.6% year on year to CNY 14,602 million, which is below our previous expectation for high-teens growth. The slower net profit growth was mainly attributable to lower-than-peer loan growth and lingering headwinds to fee income growth in first-quarter 2023. We expect these headwinds to ease and retain our fair value estimate at CNY 19 per A-share. We continue to like PAB and while we do not think it enjoys a moat, we believe its competitive strength in retail banking is intact, as evidenced by the resilient growth in both retail assets under management and wealth management services income. Fueled by the 84% increase in bancassurance sales, first-quarter wealth management-related fee income growth turned positive for the first time since 2022, up 4.8% year on year.