China Construction Bank Earnings: Revenue Momentum Remains Weak, but Expected

China Construction Bank’s first-quarter total revenue and net profit increased 1% and 0.3% year on year, respectively. Total revenue growth was in line, but net profit growth slightly missed our expectations as the bank kept provision levels prudent despite stable credit quality and an improving macroeconomic outlook. As results were largely in line, we retain our fair value estimate at CNY 6 per A-share and HKD 6.20 per H-share. Like its state-owned peers, CCB is undervalued, trading at a historically low 0.4 times 2023 price/book value and over 8% dividend yield. We currently have a preference for Agricultural Bank of China and China Construction Bank, if among the state-owned banks; and for China Merchants Bank and Ping An Bank, as we anticipate fee income growth to strengthen in the second half of 2023.