Overall 1Q19 results in line; maintain NEUTRAL
PPOP up by 12.6% YoY in 1Q19; Overall results in line
Asset quality stable in 1Q19
Maintain NEUTRAL and TP at HK$6.8
　　Overall 1Q19results in line
PPOP increased by 12.6% YoY, primarily driven by loan growth as well as non-interest income growth. Operating profit only rose by 2.0% YoY due to credit impairment cost. EPS came in at RMB0.28 in 1Q19, up 3.7% YoY. Average interest-generating assets increased by ~3.2% QoQ according to our estimates. Deposits grew fast in 1Q19, with 7.0% QoQ for time deposits and 4.5% QoQ for demand deposits.Annualized ROA and ROE were 1.2% and 14.4%, respectively.Overall 1Q19 results were in line.
　　Asset quality stablein 1Q19
NPL ratio was 1.51% in 1Q19, virtually unchanged from 2018-end. However, the total amount of NPL increased by RMB 5.2bn QoQ. Provision coverage of impaired loans rose to 185.85% in 1Q19 from 175.76% at 2018-end. We think the company’s asset quality was stable in 1Q19.
　　Net interest marginunder pressure in 1Q19as expected
NIM was 2.31% in 1Q19, lower than the ~2.39% （single quarter） in Q4 of 2018, in line with the management’s view earlier. Possible reasons are: the fast growth in time deposits in 1Q19 on the liabilities side; and the declining loan interest rates （including those of SME loans） in 1Q19 on the assets side. We expect NIM to be relatively stable for the rest of 2019.
　　Maintain NEUTRAL
ICBC （1398 HK, NEUTRAL, TP: HK$6.8） is trading at ~5.8x 2019E P/E, or ~0.7x 2019E P/B. We maintain our NEUTRAL rating for ICBC but may upgrade the rating if there is continuous positive macroeconomic signal in the coming months. Maintain TP at HK$6.8, equal to 6.7x 2019E P/E, or ~0.8x 2019E P/B. Key catalysts: upward asset quality trend, NIM expansion. Key downside risks: downward asset quality trend, NIM pressure.