PAB Reported a Strong Rebound in Third-Quarter NIM and Net Interest Income Growth

No-moat Ping An Bank, or PAB, posted strong third-quarter results, with the first nine months' net profits growing 25.8% year on year, versus 25.6% in the first half. On a positive note, both third-quarter net interest income growth and net interest margin, or NIM, beat our expectations. Third-quarter net interest income increased 10.2% against the year-ago period, outpacing the 7.9% year-on-year growth in the first half. This was primarily boosted by a six-basis-point rebound in third-quarter NIM to 2.78% from the second quarter. Another positive was lower bad debt formation rate, leading to a 1.7% year-on-year decline in third-quarter provision expenses, versus a 5% increase in the first half. Despite the strong results, we now expect a more subdued consumption recovery and a prolonged weakness in the property market to pose continuous downward pressures on NIM and wealth management-related fee income growth in 2023.