Daiwa has released a research report initiating coverage on CCB (00939) with a "Buy" rating and a target price of HK$11.05, also naming the stock as its top pick among Chinese banks. The brokerage highlighted that CCB's 2025 return on equity is projected at 10.1%, ranking second highest among the major state-owned banks, supported by funding cost advantages and fee income contributions.

Daiwa noted that CCB's net interest margin has already bottomed out ahead of its peers, with a recovery expected in the first quarter of 2026 and an expansion to 1.38% by the second quarter of 2026. Fee income is forecast to account for 14.5% of 2025 revenue, the highest proportion among state-owned banks.

The brokerage believes the market's discount applied to CCB due to its position as the largest mortgage lender in China, with a portfolio of approximately RMB 6 trillion representing 22% of total loans, is excessive. In reality, retail loans with rising pressure account for only 11% of the loan book. Around half of corporate loans are directed toward policy-supported sectors such as infrastructure, which have a better repayment track record.

With a non-performing loan ratio of 1.31%, provision coverage of 233%, and a capital adequacy ratio of 19.7%, Daiwa stated that CCB's buffers are sufficient to absorb remaining stress from property and local government financing platform exposures while maintaining current dividend payout levels.