Bank of Communications
The latest investment analysis on Bank of Communications
Group Research - Equities6 Feb 2026
Photo credit: AFP
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Company Overview
Founded in 1908, BoCom is one of the oldest banks and was one of the note-issuing banks in China in the past. It is the first nationwide state-owned commercial bank in China. The bank was listed on HKEX in June 2005 and on SHEX in May 2007. By the end of 2023, BOCOM had Rmb 14.1tr total assets.
Investment Overview
Personal loan growth in focus. BOCOM had placed greater strategic focus on personal loan growth in FY24. Following strong growth in personal loans in 1H24, BOCOM's personal loan growth outperformed the market in FY24. Its total personal loan balance increased by 11.3% y/y to Rmb 2.75tr, rising by 1.09ppts to 32.17% of its total loan book. BOCOM is one of the few major banks where personal loan growth is outpacing corporate loans. Mortgage balance was largely flat y/y as of Dec 24 while personal business and personal consumption loans grew by 20%/90%.
Expect c.1.3% earnings CAGR for FY24-27F. We have slightly revised down our FY25-27F earnings assumptions by 1-2% due to lower-than-expected NIM performance in 1Q25. Overall, we expect some NIM pressure for BOCOM, while the drop should be shallower than peers given its already low base. A higher portion of personal loans, which have higher yields and lower funding costs, would partly support its NIM.
Remains as solid dividend play. Despite the c.18% share dilution after the MOF capital injection completes later in the year, we expect BOCOM to offer near 5% dividend yield at current valuation, which remains attractive to long-term funds such as China insurance companies. BOCOM has outperformed peers in recent quarters while its FY25F P/B valuation is still at the lower end of SOE banks.
Reiterate BUY with TP unchanged at HKD 8. We have revised down our DPS assumption for FY25/26F by 18% to factor in the share dilution. Meanwhile, we maintain our H-share TP unchanged at HKD 8 as we have lowered our COE assumption in the DDM model from 12% to 11%, to reflect an increment capital inflow to China/HK market and dividend plays from China insurance companies. Our A-share TP of Rmb 8.4 is based on assumption of 15% A-H premium over H-share TP. We also have BUY on A-share.
Key risks:
Share dilution due to MOF capital injection; uncertainties of China's economic growth and asset quality deterioration on personal loans.
Founded in 1908, BoCom is one of the oldest banks and was one of the note-issuing banks in China in the past. It is the first nationwide state-owned commercial bank in China. The bank was listed on HKEX in June 2005 and on SHEX in May 2007. By the end of 2023, BOCOM had Rmb 14.1tr total assets.
Investment Overview
Personal loan growth in focus. BOCOM had placed greater strategic focus on personal loan growth in FY24. Following strong growth in personal loans in 1H24, BOCOM's personal loan growth outperformed the market in FY24. Its total personal loan balance increased by 11.3% y/y to Rmb 2.75tr, rising by 1.09ppts to 32.17% of its total loan book. BOCOM is one of the few major banks where personal loan growth is outpacing corporate loans. Mortgage balance was largely flat y/y as of Dec 24 while personal business and personal consumption loans grew by 20%/90%.
Expect c.1.3% earnings CAGR for FY24-27F. We have slightly revised down our FY25-27F earnings assumptions by 1-2% due to lower-than-expected NIM performance in 1Q25. Overall, we expect some NIM pressure for BOCOM, while the drop should be shallower than peers given its already low base. A higher portion of personal loans, which have higher yields and lower funding costs, would partly support its NIM.
Remains as solid dividend play. Despite the c.18% share dilution after the MOF capital injection completes later in the year, we expect BOCOM to offer near 5% dividend yield at current valuation, which remains attractive to long-term funds such as China insurance companies. BOCOM has outperformed peers in recent quarters while its FY25F P/B valuation is still at the lower end of SOE banks.
Reiterate BUY with TP unchanged at HKD 8. We have revised down our DPS assumption for FY25/26F by 18% to factor in the share dilution. Meanwhile, we maintain our H-share TP unchanged at HKD 8 as we have lowered our COE assumption in the DDM model from 12% to 11%, to reflect an increment capital inflow to China/HK market and dividend plays from China insurance companies. Our A-share TP of Rmb 8.4 is based on assumption of 15% A-H premium over H-share TP. We also have BUY on A-share.
Key risks:
Share dilution due to MOF capital injection; uncertainties of China's economic growth and asset quality deterioration on personal loans.