By Amanda Lee


China Everbright Bank's shares fell sharply after annual profit came in well short of expectations, with the lender's bottomline hurt by weaker net interest income and a surge in fourth-quarter provisions.

Shares of the Chinese commercial lender were 11% lower at 2.30 Hong Kong dollars (US$0.29) at the midday break Thursday, taking the stock into the red for year. If the level holds, it will mark the bank's biggest one-day percentage decline since listing in Hong Kong in 2013.

China Everbright Bank said late Wednesday that 2023 net profit fell 9.0% to 40.79 billion yuan (US$5.64 billion), well short of a consensus estimate of CNY45.40 billion by a FactSet poll of analysts. Net interest income rose 5.4% to CNY107.48 billion, but also missed expectations, while net fee and commission income fell 11%.

In the fourth quarter, profit fell to CNY3.10 billion from CNY13.62 billion in the third quarter amid a surge in provisions under a new drive to tighten nonperforming loan standards.

Citi Research analysts flagged a lack of "meaningful" dividend payout percentage hike, and said asset quality outlook remains uncertain.

Still, they kept a buy rating on the stock with a target price of HK$3.02, citing resilient loan growth and "decent trading gains."

"We think the worst for CEB is over as capital constraints have eased, while stronger-than-peers' deposit growth has been a positive surprise," they wrote in a research note.


Write to Amanda Lee at amanda.lee@wsj.com


(END) Dow Jones Newswires

03-28-24 0122ET