Goldman Sachs: The third-quarter performance of the six major state-owned banks is in line with expectations, and the average target price has been raised by 1%.

Goldman Sachs released a research report stating that the third quarter performance of the six major state-owned banks met expectations, with pre-provision operating profit and net profit increasing by an average of 4% year-on-year, in line with the forecast of the bank but 2% and 4% higher, respectively. The narrowing of the net interest margin during the period continued to meet expectations, with savings in funding costs becoming a key difference. It is expected that mainland large banks are in a more favorable position to maintain a stable net interest margin. After considering the third quarter performance, Goldman Sachs raised the average forecast for pre-provision operating profit and net profit of the six banks from 2025 to 2027 by 1%, and the average target price by 1%. The target prices for Industrial and Commercial Bank of China, Bank of China, Agricultural Bank of China, and Bank of Communications were raised to HK$5.81, HK$4.93, HK$4.96, and HK$5.78, respectively, while the target prices for China Construction Bank and Postal Savings Bank of China were lowered to HK$8.39 and HK$6.06, respectively. Looking ahead to the fourth quarter, Goldman Sachs expects the People's Bank of China to restart the trading of government bonds, which will increase overall liquidity in the domestic banking system, leading to a downward shift in the yield curve and boosting investment income and capital base. In particular, small and medium-sized banks will benefit from their high sensitivity to market liquidity and interest rates.