1Q20 results miss our expectations
　　1Q20 revenue rose 22% YoY to Rmb12.85bn, and attributable netprofit fell 4% YoY to Rmb4.08bn (vs. +16% YoY base on monthlybriefings) with ROAE down 0.36ppt YoY to 2.38%. The results missedour expectation as credit impairment reached Rmb1.31bn (or 23.8%of total profit) (vs. -Rmb16.21mn in 1Q19 and Rmb1.17bn in 4Q19).
　　We estimate the impairment ratio at 8.3% for purchased-for-resalefinancial assets. Adjusted business and administrative expense ratio(other business income excluded in total revenue) fell 4.3ppt YoY to37.8%. Gearing ratio rose 0.8x YoY (or 0.03x QoQ) to 4.17x.
　　Trends to watch
　　Active trading boosts brokerage business in 1Q20; growth in linewith market. 1Q20 brokerage income rose 37.5% YoY to Rmb2.7bn(vs. sector revenue +33% YoY), accounting for 23% of adjusted totalrevenue and driven by active trading.
　　Investment business solid, which we attribute to effective controlover equity exposure, improving bond performance, and steadyderivatives business. 1Q20 investment income rose 12% YoY toRmb5.7bn (vs. sector decline of 43% YoY), accounting for 49% ofadjusted revenue.
　　Net interest income sharply declined 40% YoY to Rmb313mn.
　　Investment banking income retreated. 1Q20 IB income fell 10% YoYto Rmb891mn, accounting for 7.7% of adjusted revenue.
　　Asset management business significantly outgrew peers with 1Q20AM income up 25% YoY to Rmb1.6bn (vs. sector income +16% YoY).
　　Financials and valuation
　　Maintain earnings forecast unchanged. CITICS A-share and H-shareare trading at 1.7x and 0.9x 2020e P/B. Maintain NEUTRAL forA-share and H-share with TPs at Rmb26.7 (1.9x 2020e P/B with 14%upside) and HK$15.50 (1.0x 2020e P/B with 4% upside).
　　Risks
　　Turnover plunges; sharp market fluctuations; disappointing capitalmarket reform.