Initiating Coverage of Industrial Bank With Fair Value Estimate of CNY 18.10 and No-Moat Rating

Industrial Bank, or CIB, has a strategic focus on green banking, investment banking, and wealth management businesses as a part of its 2021-26 strategy, which we think are the key strengths of CIB. In addition, the bank also aims to reduce funding costs and strengthen its retail banking business, which have been major weaknesses in the past. We expect CIB’s near-term earnings growth to be supported by its funding cost reduction, but it will be challenging to achieve its goal of transforming the retail business given current fragile consumer confidence.