ABC is likely to achieve faster-than-peers loan growth of c.11% YoY, onthe back of a strong funding base and lowest LDR. The bank might beamong the first to enjoy the 1.5 ppts targeted RRR cut for inclusivefinancing, given its large credit exposure to micro enterprises andagriculture-related projects. ABC should see a faster YoY decline in NPLratio, and its solid LLC buffer could unleash more earnings upside.
　　Maintain BUY with a higher GGM-derived TP of HKD5.80 （from HKD4.70,40% upside）， as we lower our CoE assumption on reduced systematicrisk.
　　Faster-than-peers credit growth. Agricultural Bank of China （ABC） wouldtentatively report its FY17 results on 22 Mar 2018. Net profit is estimated to riseby 4.1% YoY to CNY192bn, driven by a healthy credit expansion andrecovering NIM. Loan growth is likely to outpace the one of its Big-4 peers at11% YoY, given stable deposit growth and lower LDR. Net fee income mightretreat by 17% YoY, due to a windup of assets disposal business on behalf ofthe Ministry of Finance （MoF）。 Yet, it should resume a positive trend in FY18F.
　　NPL ratio may see a faster YoY decline, given a relatively high base.
　　Investment highlights:
　　i. Beneficiary of China's urbanisation process, given the bank's extensivebranch network in the county area;
　　ii. Liquid balance sheet with the lowest LDR among Big-4 banks;iii. Highest LLC ratio among Big-4 banks.
　　Potential catalysts:
　　i. Rising asset yields to drive NIM expansion;ii. Better-than-expected asset quality indictors;iii. Symmetric benchmark rate hike in 2H18F.
　　Key risks:
　　i. Stricter-than-expected asset management rule;ii. Rising corporate defaults from a faster decline in GDP growth;iii. Capital raising through equity issuance.
　　Maintain BUY with a higher TP of HKD5.80. We lift the FY18-19F profit by3-4% to reflect the faster NIM expansion and lower credit cost on easing assetquality pressure. Our sustainable ROE forecast is raised by 30bps to 12.3%.
　　We also lower CoE assumption by 100bps, as financial deleveraging shouldeffectively mitigate systematic risks. As a result, our GGM-derived P/BV rises to1.07x （from 0.93x）， 25% higher than its historical mean since listing. We believethis is justified, given the bank's improving earnings prospects and a lower riskprofile.