Postal Savings Bank of China’s first-quarter revenue and profit beat estimates, though JP Morgan warned asset quality concerns are likely to overhang sentiment.
The bank’s share price reaction is expected to be “relatively muted or even negative,” causing it to underperform peers like CCB and ICBC, the bank said in a research report.
PSBC’s revenue grew 8% year-over-year for the first quarter of 2026, while pre-provision profit jumped 19%, beating analyst expectations. JP Morgan held its ‘Neutral’ rating and HKD5.5 target price, citing a positive surprise in net interest margin (NIM) and stable fee income as drivers for the beat.
While the results were strong, JP Morgan’s report focused on deteriorating asset quality, which it believes will weigh on the stock and temper any positive reaction to the earnings surprise.
The better-than-expected performance was primarily driven by a positive surprise in the bank's net interest margin, alongside stable fee income and lower agency fee rates, according to the JP Morgan report. The robust top-line growth, however, was not enough to shift the bank's neutral stance.
The note suggests that underlying credit risks are now a primary focus for investors, potentially overshadowing operational performance. Market participants will watch the bank's next earnings release for any improvement in asset quality metrics or an increase in provisions for bad loans.
This article is for informational purposes only and does not constitute investment advice.
