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Investing.com - UBS downgraded China Citic Bank Corp Ltd (A-Shares) (601998:CH) from Buy to Neutral on Thursday, while raising its price target to RMB9.00 from RMB8.80.
The stock price has increased 25% year-to-date, which combined with more convertible bond conversion in the first quarter of 2025 has reduced the bank’s dividend yield to 4.0% based on UBS’s 2025 estimated dividend per share and current trading price.
UBS noted that investors are typically seeking yields of approximately 250 basis points above the 10-year Treasury bond yield, which stood at 1.64% as of Wednesday, resulting in a minimum expected yield of 4.0%.
The research firm indicated that China Citic Bank’s 4.0% dividend yield now appears less attractive compared to China Merchants Bank’s 4.5% yield and those of other state-owned enterprise banks.
Despite expectations of a deeper topline decline in the second quarter against a high base, UBS still anticipates positive net profit growth in the first half of 2025 for China Citic Bank, supported by lower credit costs.
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