---
endpoint: analytics
pattern: Financial Services
status: done
latency_ms: 271528
conversation_id: a1c53475-d7c0-46f0-97aa-93511eb7fd48
citations: 15
created: 2026-05-31 21:45:30Z
---

# What’s the bull case bear case for CCB?

# China Construction Bank (CCB, 0939.HK / 601939.CH) — Bull Case vs Bear Case

**Synthesis from CLSA internal research (latest: 6 Jun 2025) + CCB's 2025 annual results (released Mar 2026) and 1Q26 filing (released Apr 2026)**. Most recent CLSA rating is **Outperform** with the H-share at HK$6.08 and a target price of HK$6.20 [3][8]; coverage was transferred to Ding Luo on 6 June 2025. Note that the CLSA archive available here was last synced in June 2025, while the public filings/news data run through May 2026 — the bull/bear framework reflects the CLSA view; the operating data has been refreshed with the most recent prints.

---

## Snapshot

| Metric | Value | Source |
|---|---|---|
| CLSA Rating | O-PF (Outperform) | [8] |
| H-share TP (Jan 2025 outlook) | HK$6.20 | [3] |
| FY24 P/E (12m fwd) | 4.1x | [3] |
| FY24 P/B (12m fwd) | 0.40x | [3] |
| ROE (25CL est.) | 9.4% | [3] |
| Dividend yield (H, FY24) | 6.8%–7.3% | [1][3] |
| 2025 NPL ratio | 1.31% | [9] |
| 2025 Provision coverage | 233.15% | [9] |
| 2025 Total assets | RMB 45.63 trn (+12% YoY) | [9] |
| 1Q26 Revenue | RMB 211.26 bn (+11.15% YoY) | [12] |
| 1Q26 Net profit | RMB 86.82 bn (+3.68% YoY) | [12] |
| 1Q26 NIM | 1.36% (vs 1.41% y/y) | [14] |
| 1Q26 CET1 | 14.26% (vs 13.98% y/y) | [14] |
| Market cap (end-2025) | US$265bn (+25% YoY) | [13] |

---

## BULL CASE

### 1. Highest-yielding safe-haven dividend story in the China financial complex
CCB (H) screens as the **highest dividend yield among CLSA's covered China banks at 7.3%**, ahead of ICBC (H) at 6.8% and well above CMB (A) at 5.1% [1]. With China's 10-year treasury yield around 1.59–1.78% in early 2025, the H-share dividend yield offers a ~5+ ppt spread that becomes structurally more attractive every time long-end rates compress further [2]. CLSA explicitly frames Chinese banks as a **"relative safe haven"** within its 2025 financials framework, with CCB and ICBC as its top picks [7].

### 2. Capital injection removes the equity-raising overhang and is "long-term positive"
The Ministry of Finance's Rmb520bn recapitalization of the four state banks (CCB, BOC, BOCOM, PSBC) was announced in March 2025. CCB's portion is an **A-share private placement of up to Rmb105bn at Rmb6.05/share**, an 8.8% premium to the A-share close and **0.73x 2024 PB**; CET1 rises by ~48bps to 14.97% pro forma. The MoF cannot sell within five years, and CCB cited **TLAC compliance by 2028** as a rationale [4]. CLSA's read-through: this is **long-term positive** because state banks are unable to raise capital at low PBs from the market, and the regulator is signalling that it views state bank profit and capital as systemically important [5]. By 1Q26 reported CET1 had already lifted to **14.26% (vs 13.98% y/y)** — a 28bps improvement before the placement is fully reflected [14].

### 3. Smallest dilution of the four state-bank recap candidates
Among CCB, BOC, BOCOM and PSBC, **CCB has the smallest dilution and the smallest A-share premium** in the placement structure [5]. Quantitatively, CCB's post-placement EPS drops only **-4.3%**, DPS **-4.4%**, BPS **-1.2%** and ROAE just **-18bps** to 10.57% — far better than PSBC's -17.2% EPS hit or BOCOM's -15.6% [6]. After the deal, CCB's H-share dividend yield is still **6.2%** (vs 6.5% pre-deal) [6]. The dilution that scared the market is materially less of a concern at CCB than at the other three state banks.

### 4. NIM stabilization — the worst is arguably behind
On the Q4 2025 / FY2025 results call, management stated that they **"stabilize[d] the basic NIM structure and the decline has continued to narrow"** [10]. Liability-side relief is the key driver: high-cost retail savings deposits have completed repricing, the bulk of high-rate term deposits are maturing in 2026, and CCB cut savings deposit cost by 33bps year-on-year [10][11]. Management explicitly guided that "the loan pressure has been alleviated" heading into 2026 [11]. CLSA's view echoes this: most banks "are still targeting stable loan growth and expect NIM contraction to narrow in 2025," with no evidence of forced aggressive loan growth in response to the recap [5].

### 5. Asset-quality remains the cleanest among the SOE majors
2025 NPL ratio held at **1.31% (-3bps YoY)**, with provision coverage at **233.15%** — providing a thick buffer against any retail-loan stress [9]. The 1Q26 print confirmed **NPL ratio flat at 1.31%** vs end-2025 [14]. CCB also flagged that personal loan NPL formation has slowed: "the CCB's personal loans, non-performing ratio has not increased as quickly as they did before."

### 6. Scale, franchise and balance-sheet growth still compounding
2025 total assets grew **+12% to RMB 45.63 trn**, gross loans +7.47% to RMB 27.77 trn, and total dividend paid RMB 106 bn [9]. Technology-finance loans surpassed RMB 5 trn (+89%), green finance loans RMB 6 trn, inclusive finance RMB 3.69 trn — all double-digit growth and aligned to the state's "five priorities" [9]. 1Q26 revenue accelerated to **+11.15% YoY** with PPOP +6.0%, demonstrating that top-line is no longer in contraction [12]. CCB's end-2025 market cap reached **US$265bn (+25% YoY)** and management has now adopted a formal "market value management mechanism" [13].

### 7. Beneficiary of policy-driven equity inflows
CLSA's January 2025 read of the regulator's push to channel 30% of new state-insurer premia and 10% of A-share free float (via mutual funds) into equities translates to roughly **Rmb135–150bn of annual A-share inflows**, with high-yield names like CCB as primary beneficiaries [7]. CLSA's top picks list explicitly reads "ICBC and CCB" [7].

---

## BEAR CASE

### 1. NIM is still grinding lower
Despite management's "narrowing decline" rhetoric, 1Q26 NIM fell to **1.36% from 1.41% year-ago** — still a 5bps YoY compression [14]. Structural pressure from LPR cuts, mortgage repricing, and a savings-rate floor that lags loan repricing means NIM may continue grinding lower before it stabilises. Sub-1.40% NIM is historically thin for CCB and any further LPR cut in 2026 could re-open this drag.

### 2. Dilution is still real, even if smallest
Even though CCB's dilution is the lowest of the four recap candidates, EPS does fall **-4.3%**, DPS **-4.4%** and ROAE **-18bps** post-placement [6]. The H-share div yield steps down from 6.5% to **6.2%** [6]. If the **second batch of recap (ABC + ICBC, estimated ~Rmb500bn in 2026)** is followed by further bank capital raises, the overhang on payout durability returns even though CCB is "first batch" [5]. CLSA notes regional banks and joint-stock banks may want to follow the state banks in placements [5].

### 3. Q1 2026 sentiment broke negatively on credit losses
The day after CCB's Q1 release, the stock **fell 2.3% to HK$8.78** with the market focused on **higher credit losses / impairments weighing on sentiment** [15]. While NII and fee income did improve sequentially supported by a better quarter-on-quarter NIM trajectory [15], the impairment line shows asset-quality risks are still front-of-mind for the buy-side.

### 4. Retail-loan asset quality remains a watch item
Management itself flagged retail loans as the focal point of go-forward risk management — they have specifically tightened controls on retail loan risk because the prior trajectory was deteriorating. With property still mid-correction and consumer credit normalizing, headline NPL stability of 1.31% may understate true forward stress. Provision coverage of 233.15% is comfortable but it has been **flat year-on-year** — i.e., no buffer-building [13].

### 5. Property-sector exposure and macro sensitivity
CCB has historically been the largest mortgage lender in China, leaving it most exposed to ongoing property-price weakness. CLSA's bull-case "upside scenarios" list includes "property price stabilisation" as a catalyst — meaning the market still does not assume this base case [2]. If property prices fail to stabilize, mortgage early-prepayment and refinancing pressure continues to weigh on both NIM and asset quality.

### 6. Banks remain a "relative" — not absolute — safe haven
CLSA's framework is explicit that banks are favored as a **relative** safe haven and subject to **interest-rate-cut risks** even in the base case. If the market rotates back into higher-beta themes (CLSA notes insurers/brokers and online lenders sit higher in their pecking order than banks for 2025 in a tech-rally regime), CCB risks underperformance in a "risk-on" tape. CLSA's own Feb 2025 sector tour found investors "more interest[ed] in higher-beta subsectors" with CCB benefiting only as the dividend-yield alternative.

### 7. ROAE is structurally lower than peers like CMB
At 9.4% ROE (25CL est.) and 0.40x P/B, CCB trades like a utility — but CMB (A) earns 13.8% ROE at 0.88x P/B [3]. The valuation gap reflects a fundamentally lower-quality return profile: CCB's appeal is dividend yield, not franchise quality. In a scenario where investors prioritise sustainable ROA expansion (digital, wealth management, fee-based), CCB structurally lags the joint-stock leaders.

### 8. State-policy bank role caps upside on ROE
Management's framing — "service of key areas," "five priorities," "real-economy support," "stable cash dividends" — confirms that CCB acts as a policy transmission instrument. That mandate caps ROE upside even when conditions improve, because incremental capital is directed by state priorities rather than risk-adjusted returns. The +RMB 5trn of tech-finance loans (+89%) and +RMB 6trn green finance growth shape balance sheet allocation more than NIM optimisation [9].

---

## Verdict from CLSA's framework

CLSA's stance is **Outperform** with CCB and ICBC as **top picks** in China banks [7]. The investment thesis is **defensive carry**: a 6–7% sustainable H-share dividend yield on a 0.4x book multiple, with newly fortified capital (CET1 +48bps post-placement, 14.26% as of 1Q26) and the cleanest NPL position among the Big Four [4][5][14]. The bear case is essentially that NIM keeps grinding lower, dilution is non-trivial, and a risk-on tape rotates the market into higher-beta names. CLSA's resolution: in 2025/26 with macro uncertainty under Trump 2.0 tariffs and continued property drag, the defensive carry trade dominates — hence the top-pick designation.

---
**Sources**
[1] China financials (2025 Outlook: Redux+) — CLSA, 12 Jan 2025 — 607947966LinqAlpha.PDF
[2] China financials (2025 Outlook: Redux+) — CLSA, 12 Jan 2025 — 607947966LinqAlpha.PDF
[3] China financials (2025 Outlook: Redux+) — CLSA, 12 Jan 2025 — 607947966LinqAlpha.PDF
[4] China banks sector (Recapitalisation plans unveiled) — CLSA, 30 Mar 2025 — 607954420LinqAlpha.PDF
[5] China banks sector (Recapitalisation plans unveiled) — CLSA, 30 Mar 2025 — 607954420LinqAlpha.PDF
[6] China banks sector (Recapitalisation plans unveiled) — CLSA, 30 Mar 2025 — 607954420LinqAlpha.PDF
[7] China financials (Get the money in) — CLSA, 23 Jan 2025 — 607948869LinqAlpha.PDF
[8] China financials (Get the money in) — CLSA, 23 Jan 2025 — 607948869LinqAlpha.PDF
[9] China Construction Bank Corp., Q4 2025 Earnings Call, 27 Mar 2026
[10] China Construction Bank Corp., Q4 2025 Earnings Call, 27 Mar 2026
[11] China Construction Bank Corp., Q4 2025 Earnings Call, 27 Mar 2026
[12] CCB 2026 First Quarter Report (interim_report, filed 27 Apr 2026)
[13] China Construction Bank Corp., Q4 2025 Earnings Call, 27 Mar 2026
[14] StreetAccount — "China Construction Bank reports Q1 net income attributable CNY86.29B, +4% vs year-ago" (29 Apr 2026)
[15] StreetAccount — "Quick Take: China Construction Bank fell (2.3%) post Q1 results" (30 Apr 2026)

## Citations

- [1] **607947966LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/01/607947966LinqAlpha.PDF>
- [2] **607947966LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/01/607947966LinqAlpha.PDF>
- [3] **607947966LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/01/607947966LinqAlpha.PDF>
- [4] **607954420LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/03/607954420LinqAlpha.PDF>
- [5] **607954420LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/03/607954420LinqAlpha.PDF>
- [6] **607954420LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/03/607954420LinqAlpha.PDF>
- [7] **607948869LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/01/607948869LinqAlpha.PDF>
- [8] **607948869LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/01/607948869LinqAlpha.PDF>
- [9] **China Construction Bank Corp., Q4 2025 Earnings Call, 27-March-2026 5** · external
- [10] **China Construction Bank Corp., Q4 2025 Earnings Call, 27-March-2026 5** · external
- [11] **China Construction Bank Corp., Q4 2025 Earnings Call, 27-March-2026 5** · external
- [12] **建设银行2026年第一季度报告** · external
- [13] **China Construction Bank Corp., Q4 2025 Earnings Call, 27-March-2026 5** · external
- [14] **China Construction Bank reports Q1 net income attributable CNY86.29B, +4% vs year-ago CNY83.35B** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4646499&_doc_date=2026-04-29&_doc_product=SA>
- [15] **Quick Take: China Construction Bank fell (2.3%) post Q1 results, higher credit losses/impairments weighing on sentiment** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4650146&_doc_date=2026-04-30&_doc_product=SA>

