According to the research report of Bank of China International, the valuation of China mainland banking stocks has been re-evaluated amid the high market sentiment driven by stimulus policies. The bank expects that China mainland banks will deliver stable operational performance in the third quarter of 2024, benefiting from higher trading income and lower impairment losses. The bank predicts that Industrial Bank (601166.SH) will achieve the best profit growth of 3%, followed by Agricultural Bank (01288.HK), Bank of Communications (03328.HK), and China Citic Bank Corporation (00998.HK). Additionally, the net interest margin in the third quarter is expected to drop by 15 basis points year-on-year to 151 basis points. The bank stated a continued preference for state-owned banks, particularly Agricultural Bank and Bank of China (03988.HK).

Bank of China International's investment rating and target prices for China mainland banking stocks are as follows:

Stock | Investment Rating | Target Price (HKD)

Agricultural Bank of China (01288.HK) | Outperform | HK$4.2 → HK$4.4

Bank of China (03988.HK) | Outperform | HK$4.1 → HK$4.4

Bank of Communications (03328.HK) | Outperform | HK$6.3 → HK$6.6

Postal Savings Bank of China (01658.HK) | Outperform | HK$4.8 → HK$5.5

CM Bank (03968.HK) | Outperform | HK$41 → HK$46

China Citic Bank Corporation (00998.HK) | Outperformed the market | HKD 5.1 → 6

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