ABC(1288.HK):3Q15bottom line picked up slightly on strong noninterest income,NIM contracted more than expected

ABC reported 3Q15NPAT of RMB48.9bn, up 1.0% YoY, in linewith our expectation. 9M15NPAT amounted to RMB153.2bn, up0.5% YoY , accounting for 85.7% of our full year estimates for FY15E

    Non-interest income grew rapidly by 26.2% YoY in 3Q15, mainlydriven by a surge in other incomes and a reverse in fee incomegrowt

    NIM contracted by 18bps QoQ to 2.54% in 3Q15, larger thanexpected, as asset yield declined faster than funding cost

    3Q NPAT buoyed by higher non-interest income despitelarger NIM contraction; asset quality deterioration lingered

    Positives: 1) Non-interest income grew strongly by 26.2% YoY in 3Q15mainly driven by a surge in other incomes (primarily from insurancepremium, net gain on FX trading as well as government grant) and areverse in fee income growth (from -0.4% YoY in 1H15to 5.0% YoY in3Q15); 2) LLR further lifted to 4.41% in 3Q15given elevated credit cost of0.82% in 3Q15, well above the minimum regulatory requirement of2.50%; 3) CAR improved on internal capital generation from retainedearnings