Gelonghui, May 16 丨 Motong Development Research reports that after experiencing reforms over the past three years, China Minsheng Bank (1988.HK) has refocused on achieving sustainable growth from 2023 to 2025. The bank believes that its small and micro enterprise (MSE) business is the key driver of the bank's profit growth. Motong raised its earnings forecasts for the 2024-25 fiscal year by 8% and 19% respectively, mainly reflecting higher net interest spreads, more stable expense trends, and contraction in impairment expenses. The target price of H shares rose from HK$3 to HK$4.3, and the H share rating was raised from “neutral” to “increased holdings.”

Motong said that after three years of profit contraction, the private bank's revenue and profit growth in the first quarter of this year improved moderately, and the bad debt index declined. Furthermore, the bank is a pioneer in the MSE financing business and launched the personal business loan product Commercial Loan Connect as early as 2009. Currently, MSE loans account for 17% of total loans, far below 26% at the peak (2013). With the increase in MSE customers, infrastructure construction, and strategic priorities to increase MSE loans over the past three years, the development of the MSE business is expected to accelerate. Since MSE's loan yield is higher than average loans, Motong expects the bank to increase the unsecured portion of small and micro loans, which may boost its net interest spreads and income.