---
endpoint: analytics
pattern: 08 · Workflow output
status: done
latency_ms: 245058
conversation_id: 9e9ea774-c8c0-4ef6-b675-4cf0995dd4fc
citations: 8
created: 2026-05-31 17:51:37Z
---

# Build a one-pager on ICBC for the EM Strategy desk by EOD.

# ICBC (1398 HK / 601398 CH) — EM Strategy One-Pager
**Industrial & Commercial Bank of China Ltd — Major Bank, China Financials**
*As of 31 May 2026*

---

## 1. Snapshot

| | |
|---|---|
| **Ticker** | 1398 HK (Class H) / 601398 CH (A-share) |
| **Last print (Apr 27 close)** | HK$7.21 ([10]) |
| **52-wk performance** | +39.5% YoY ([10]) |
| **Major shareholders** | Central Huijin 34.7%, MOF 34.6% ([12]) |
| **Market cap (approx)** | ~RMB 2.4tn (largest bank globally by assets); total assets RMB 55.77tn ([4]) |

---

## 2. CLSA House View — In-House Coverage

**Rating: O-PF. Target Price: HK$5.20 (H-share) / Rmb6.70 (A-share). Coverage held by Ding Luo (transferred 6 Jun 2025).** ([1])

| Listing | Ticker | CLSA Rating | CLSA TP | Spot at transfer | TP vs spot |
|---|---|---|---|---|---|
| ICBC (H) | 1398 HK | O-PF | HK$5.20 | HK$5.90 | (12)% |
| ICBC (A) | 601398 CH | O-PF | Rmb6.70 | Rmb7.09 | (5)% |

**Read-through for EM Strategy desk:** CLSA's TP sits below where shares traded at handover (HK$5.90 in Jun-25) and well below the latest tape (HK$7.21 on Apr 27, 2026 — +22% above CLSA TP) ([1])([10]). The O-PF call has been a defensive/yield trade rather than a capital-appreciation call; the stock has run on the China high-dividend/safe-haven theme and capital recycling flows, leaving CLSA's framework behind.

---

## 3. Thesis Pillars (CLSA Framework)

- **(i) Dividend yield / high-yield safe-haven**: CLSA's 2025 outlook flagged ICBC (H) at 6.8% forward yield, alongside CCB (H) 7.3%, as the defensive China-banks book under Trump 2.0 macro uncertainty ([4])([5]). Top picks among China banks: **ICBC and CCB** ([2]).
- **(ii) Long-term capital inflow tailwind**: 23 Jan 2025 regulators encouraging mutual funds (+10%/yr A-share holdings) and state insurers (30% of new premium) to deploy into A-shares; estimated Rmb135–150bn annual insurer inflow disproportionately benefits high-yield names. CLSA top bank picks remained ICBC and CCB on this flow ([2]).
- **(iii) Capital position / recapitalisation overhang**: First batch (Rmb520bn) went to CCB, BOC, BOCOM, PSBC at issuing PB of 0.67–0.76x in Mar-25. CLSA explicitly flagged **ABC and ICBC for a second batch ~Rmb500bn in 2026**, framed as long-term positive (offsets low-PB capital constraint) despite near-term dilution risk ([6]).
- **(iv) NIM / quality**: At the July-2024 ICBC NDR, mgmt guided NIM YoY decline "narrowing", stable NPL, stable coverage, and revenue/NP growth at ~1Q-run rate. Dividend yield ~7.7% on 0% EPS growth assumption ([7]).

---

## 4. Q1 FY2026 Results — Modest Beat, NIM Inflected

Released 29 Apr 2026 (Bloomberg estimates source). **Q1 prints (RMB millions; 3M to 31 Mar 2026 vs 3M 31 Mar 2025):**

| Metric | Q1 2026 | Q1 2025 | YoY |
|---|---|---|---|
| **Net interest income** | 168,531 | 156,784 | **+7.5%** ([3]) |
| **Net fee & commission income** | 40,916 | 38,878 | +5.2% ([3]) |
| **Operating income** | 221,980 | 204,688 | **+8.4%** ([3])([9]) |
| **Credit impairment losses** | 69,294 | 56,969 | **+21.6%** ([9]) |
| **Operating profit** | 100,247 | 98,221 | +2.1% ([3]) |
| **Net profit attributable** | 86,941 | 84,156 | **+3.3%** ([8]) |
| **EPS (RMB)** | 0.24 | 0.23 | +4% ([3]) |
| **NIM** | **1.29%** | 1.28% (YE25) | +1bp ([8]) |
| **Cost-to-income** | 22.09% | 22.90% | (81bps) ([9]) |
| **NPL ratio** | 1.31% | 1.31% (YE25) | flat ([8]) |
| **CET1 ratio** | **13.26%** | 13.57% (YE25) | (31bps) ([5])([8]) |

**Balance sheet (RMB bn):** Total assets **55,773** (+4.3% QoQ); Loans **30,826** (+3.8% QoQ); Customer deposits **38,587** (+3.4% QoQ) ([4]).

**Tape reaction:** 1398.HK closed **-2.6%** day after print (vs HSI -1.3%) as elevated impairments and CET1 erosion partially offset the NIM/revenue beat ([7]).

---

## 5. Sell-Side Consensus (Post Q1 2026)

| Brokerage / Analyst | TP (HK$) | Action |
|---|---|---|
| CICC — Yingqi Lin | **8.97** | Outperform ([7]) |
| JPM — Katherine Lei | **7.90** | Overweight ([7]) |
| UBS — May Yan | **7.79** | Buy ([7]) |
| **Consensus (n=14)** | **HK$8.05** (+3.4% revision post-Q1) | Buy 93% / Hold 7% / Sell 0% — **14.6% upside** implied ([7]) |
| **CLSA — Ding Luo** | **5.20** | O-PF (last refresh Jun-25) ([1]) |

**Consensus revenue/EPS revisions post-Q1:** FY26e revenue CNY 853.5bn (+0.4%), FY26e EPS CNY 1.03 ([7]).

**Note:** CLSA is the lowest TP on the Street and visibly stale relative to consensus by ~55%; the desk should treat CLSA as a vintage view pending re-initiation by Ding Luo.

---

## 6. Recent Capital Actions (NEW since CLSA last refresh)

- **Feb 2026:** NFRA approved issuance of **RMB 800bn** of capital + TLAC non-capital debt instruments (RMB 750bn AT1 / Tier 2, RMB 50bn TLAC) ([6]).
- **April 2026:** Executed **RMB 50bn Tier 2** + **RMB 30bn perpetual AT1** + **RMB 50bn TLAC** in the National Interbank Bond Market ([6]).

This is the operational scaffolding for the second-batch recapitalisation CLSA flagged. Read: management is front-running G-SIB TLAC requirements and creating capacity ahead of any MoF-led A-share private placement. CET1 (13.26%) declined ~31bps QoQ as RWA grew faster than retained earnings — supports the "needs capital" narrative ([5]).

---

## 7. EM Strategy Desk Take-aways

- **Stock has rerated hard on the high-yield / SOE-dividend / "national team" rotation** — 1398 HK +39.5% over 12M, sitting at 52-week highs through April ([10]). This is a flow trade, not a fundamental rerating story; ROE remains structurally low (CLSA modeled FY24-26 ROE 9.4–9.5%, PB ~0.3-0.4x) ([13]).
- **NIM inflection is the new fundamental tailwind** — Q1 NIM +1bp QoQ to 1.29% breaks a multi-year decline cycle, validated by JPM/UBS/CICC commentary ([7]). Lower funding costs (deposit rate cuts feeding through) more than offsetting LPR pressure.
- **Credit cost is the wedge** — +22% YoY impairment build (Rmb 69bn) hints at residual property/LGFV stress; analysts flag this as the key gating factor on earnings progression ([7])([9]).
- **Dilution clock starts in 2H 2026** — pending MoF-led A-share private placement (~Rmb500bn estimated for ICBC+ABC combined). Net dilutive for H-share holders if priced near A-share PB; partly hedged by the buy-and-hold MoF + Central Huijin lock-up (~70% combined) ([6])([12]).
- **Positioning:** Sell-side overwhelmingly long (93% Buy), avg upside 14.6%. Limited dispersion — crowded long. Pair-trade construction (long ICBC / short CCB or BOC) requires conviction on which name gets recap'd first; CLSA's Mar-25 framing suggested ABC and ICBC together in batch 2 ([6]).

---

**Sources**
[1] China banks (Transfer of coverage) — CLSA (6 Jun 2025) — 607961079LinqAlpha.PDF (TP table)
[2] China financials (Get the money in) — CLSA (23 Jan 2025) — 607948869LinqAlpha.PDF
[3] ICBC 1Q 2026 Quarterly Report (IFRS) — Bank press release (29 Apr 2026)
[4] ICBC 1Q 2026 — Consolidated Statement of Financial Position
[5] ICBC 1Q 2026 — Pillar 3 KM1 capital indicators
[6] China banks sector (Recapitalisation plans unveiled) — CLSA (30 Mar 2025) — 607954420LinqAlpha.PDF; ICBC Q1 2026 — Issuance of capital instruments / TLAC
[7] Street Takeaways — ICBC Q1 earnings — StreetAccount (1 May 2026); ICBC NDR takeaways — CLSA (18 Jul 2024) — 607934099LinqAlpha.PDF
[8] ICBC reports Q1 net income CNY86.94B — StreetAccount (29 Apr 2026)
[9] StreetAccount Metrics Recap — ICBC Q1 — StreetAccount (29 Apr 2026)
[10] StreetAccount HK 52-week highs/lows — StreetAccount (27 Apr 2026)
[11] China financials (Transfer of coverage) — CLSA (6 Jun 2025) coverage list
[12] ICBC NDR (Major shareholders / 7.7% yield) — CLSA (18 Jul 2024) — 607934099LinqAlpha.PDF
[13] ICBC NDR — Financials table 22A–26CL — CLSA (18 Jul 2024)
[14] China financials 2025 Outlook (Dividend yield table) — CLSA (12 Jan 2025) — 607947966LinqAlpha.PDF
[15] China financials 2025 Outlook (Dilution / top picks) — CLSA (12 Jan 2025) — 607947966LinqAlpha.PDF
[16] China banks sector — Recap Implications (ABC/ICBC Batch 2 Rmb500bn) — CLSA (30 Mar 2025)

## Citations

- [3] **Industrial and Commercial Bank of China Limited Class H: Industrial and Commercial Bank of China Limited First Quarterly Report of 2026** · external
- [4] **Industrial and Commercial Bank of China Limited Class H: Industrial and Commercial Bank of China Limited First Quarterly Report of 2026** · external
- [5] **Industrial and Commercial Bank of China Limited Class H: Industrial and Commercial Bank of China Limited First Quarterly Report of 2026** · external
- [6] **Industrial and Commercial Bank of China Limited Class H: Industrial and Commercial Bank of China Limited First Quarterly Report of 2026** · external
- [7] **Street Takeaways - Industrial & Commercial Bank of China Q1 earnings** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4653406&_doc_date=2026-05-01&_doc_product=SA>
- [8] **Industrial & Commercial Bank of China reports Q1 net income attributable CNY86.94B, +3% vs year-ago CNY84.16B** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4646362&_doc_date=2026-04-29&_doc_product=SA>
- [9] **StreetAccount Metrics Recap - Industrial & Commercial Bank of China Q1 Earnings** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4646400&_doc_date=2026-04-29&_doc_product=SA>
- [10] **StreetAccount Summary: Hong Kong Stocks reaching new 52-week highs/lows** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4641279&_doc_date=2026-04-27&_doc_product=SA>

