Ping An Bank (000001.SZ): In-line 2Q26, decent earnings growth & ROE outlook with attractive dividend yield

Research evidence excerpt

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14 Aug 2026 12:57:28 ET │ 13 pages

Ping An Bank (000001.SZ)

In-line 2Q26, decent earnings growth & ROE outlook with attractive

dividend yield

CITI'S TAKE

PAB reported 1H26 PPOP growth of +2.4% y-y to RMB50.8bn, and 1H26

earnings growth of +3.3% y-y to RMB25.7bn (accounting for 59% of FY26E

consensus). 2Q26 PPOP grew +0.4% y-y (although slower vs. +4.5% y-y in

1Q26, due to high base in trading gain), helped by recovered NIM and better

cost efficiency. 2Q26 NPAT before pref. div came in better at +3.7% y-y (vs.

+3% y-y in 1Q26) on lower credit costs and effective tax rate. ROA was flat

y-y at 0.74% in 2Q26, while ROE were down -25bp y-y to 9.59% in 2Q. PAB

declared interim DPS of RMB0.25 (+5.5% y-y), implying a dividend payout

ratio of 18.8% (+0.4ppt y-y).

Key Positives — NIM expanded +2bp q-q to 1.81% in 2Q26, with positive from lower

deposit costs (-6bp q-q in 2Q) and recovered interbank asset yield (+23bp q-q in

2Q) more than offset the negative from softer loan yield (-7bp q-q in 2Q) and

investment yield (-6bp q-q in 2Q). Retail AUM growth accelerated to +2.6% q-q in

2Q26 (vs. +1.2% q-q in 1Q26). Asset quality: NPL ratio remained stable q-q at 1.05%

in 2Q26. Corporate NPL ratio was steady q-q at 0.87%, with improvement in

property sector (-7bp h-h to 2.15% in 1H26) offsetting the deterioration in

transportation/commerce (+44bp/+20bp h-h to 2.77%/1.04% in 1H26). Retail NPL

ratio was also flat q-q at 1.23% in 2Q, with better asset quality in mortgage (-6bp hh to 0.22% in 1H26) offset by the weaker NPL ratio for consumption loan (+12bp hh to 1.24% in 1H26). After adding back write-offs, gross NPL formation rate was

+50bp q-q/+5bp y-y to 1.4% in 2Q26. SML ratio was up +5bp q-q to 1.83% in 2Q26,

while overdue >3m ratio declined -3bp q-q to 0.73% in 2Q. NPL to overdue >90d

ratio was up +5ppt q-q to 143% in 2Q, indicating more conservative NPL recognition

standard in 2Q26. PAB charged a credit cost of 1.37% in 2Q26 (-3bp y-y), implying

NPL coverage ratio of 220% in 2Q26 (flat q-q / -19ppt y-y). CIR was down -1.1ppt yy to 28.1% in 2Q26, with the decline in opex (-4.9% y-y in 2Q) more than offsetting

the soft revenue growth (-1.1% y-y in 2Q).…