Daiwa has released a research report initiating coverage on CM Bank (03968) with an "Outperform" rating and a target price of HK$56.3, citing a turning point in fee income that is expected to reshape its profitability advantages.

The brokerage noted that CM Bank's fee income declined by a cumulative 23% between 2021 and 2024, primarily due to regulatory adjustments rather than deterioration in its franchise value. However, a recovery is already underway, with net fee income projected to grow 4% in 2025 and 6% year-on-year in the first half of 2026.

Daiwa forecasts net fee income growth of 8% to 8.4% for the 2026 to 2028 period. Additionally, it expects total operating revenue to increase 6% to 7% year-on-year and net profit to grow 6% to 8% over the same three-year window.