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14 Sep 2022

#ideas2invest: China Banks as Strong Dividend Play

A 5 minute read
Story of the day

China banks have seen increased volatility over the past months as homebuyers refuse to service their mortgage obligations on unfinished residential projects. However, the impact will be limited – the real estate sector as a percentage of China’s gross domestic product has remained relatively low since 2010.

We maintain our constructive view on large state-owned banks for their attractive dividend yield, balance sheet strength, and the government's unwavering commitment to maintain the wellbeing of their country's economy.

Click Here: "Invest in strong dividend plays"

What does this mean for your portfolio?

Gain exposure to China banks for the following reasons:
1. They have maintained dividend payments and remain a strategically important sector to the government
2. Affected real estate projects contribute a manageable portion of China’s GDP
3. The government is likely to introduce policies to alleviate the situation

We like these:

Large state-owned banks

1. They have strong balance sheets with higher loan loss provisions, non-performing loans ratios lower than industry average, and Large capital bases
2. Large state banks distribute 30% of their net profit after tax in the form of dividends
3. They can tap on cheaper funding from their larger current-account-savings-account deposit base

Want to know more on our stock research ideas?

Please visit DBS Treasures website.
Click under “Research” > “What's New” > “Equities to Watch”: icon-financials

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