Moving past the trough
■ We see accelerating mortgage growth helping NIM given their higher yields versus corporate loans, even as both segments’ yields rose qoq in 3Q21.
■ Our analysis also shows the benefit to net profits of a 1%-pt faster mortgage growth outweighs the cost of lower yields by at least a factor of two (Fig 5).
■ We continue to see banks as a relative defensive play even amidst new Covid-19 variants, given their track record of stable profitability & dividends.
■ Reiterate sector neutral. Top picks are CMB, PAB, CITIC and CCB.