CRCB’s 3Q26 attributable NP, revenue, and pre-provision operating profit (PPOP) rose by 12.4%, 9.9%, and 8.3% YoY, respectively. For 9M26, they increased by 7.9%, 8.5%, and 10.6% YoY, with the growth rates changing by +1.8pp, +0.7pp, and -1.1pp versus 1H26, underscoring continued operating resilience. The annualized ROE and ROA were 10.97% and 0.91%, respectively, up by 0.11pp YoY and broadly flat YoY. Net interest income maintained robust growth, the decline in non-interest income narrowed, and efforts to lower funding costs and control expenses continued to deliver results. Asset quality remained broadly stable, while operating quality and efficiency improved steadily as the bank continued to advance its community commercial ecosystem strategy. Maintain OVERWEIGHT on CRCB-A and BUY on CRCB-H.
Sound asset quality, stronger core capital
The NPL ratio was 1.05% at end-September, unchanged from end-June, with asset quality remaining broadly sound. The provision coverage ratio fell by 4pp from end-June to 353%, while loss-absorption capacity remained ample. We estimate annualized credit costs of 0.59% for 3Q26, down by 19bp YoY, and an annualized NPL formation rate of 0.85%, up by 8bp QoQ. The common equity Tier 1 (CET1) capital ratio rose by 20bp from end-June to 12.53% at end-September. The Tier 1 and total capital ratios were 12.72% and 13.92%, respectively, both down by 15bp from end-June, mainly due to the redemption of RMB4.0bn in perpetual bonds during 3Q26. Risk-weighted assets increased by 11.8% from end-2025, while internal CET1 capital generation remained solid.
Target 2027E PB of 0.62x/0.60x for A/H-shares
We forecast 2026/2027/2028 net profit of RMB13.1bn/14.2bn/15.4bn (+0.1%/broadly unchanged/-0.2% vs our previous forecasts). We forecast 2027 BVPS of RMB13.29 (previously RMB12.38 for 2026), implying 2027E PB of 0.55x/0.42x for the A-/H-shares. A/H-share peers trade at averages of 0.49x/0.39x 2027E PB on Wind consensus (previously 0.52x/0.45x 2026E PB). As the bank’s integrated operations deliver results, we assign target 2027E PB multiples of 0.62x/0.60x to the A-/H-shares (previously 0.69x/0.66x 2026E PB), deriving our target prices of RMB8.24/HKD9.39 (previously RMB8.53/HKD9.53). We maintain OVERWEIGHT/BUY on CRCB-A/CRCB-H, respectively.
Risks: slower-than-expected asset quality recovery, weaker-than-expected earnings improvement.