Bank of America: Lower Agricultural Bank A + H share target price, lower profit forecasts for this year and next year.

Bank of America Securities released a report stating that Agricultural Bank of China's net profit last year increased by 3.2% year-on-year to 291 billion yuan, which was 0.9% lower than the bank's expectations; core profits fell slightly by 0.1% year-on-year, which was 1.8% lower than expectations. The return on equity dropped by 0.3 percentage points to 10.2% last year, and the core Tier 1 capital adequacy ratio decreased by 35 basis points to 11.08%. The dividend payout ratio remained stable, with a year-on-year increase of 3.1% to 0.2495 yuan per share, with H-shares and A-shares dividend yields at 5.2% and 3.8% respectively, which are relatively low compared to peers. Taking into account the downward revision of profit forecasts and a 50 basis point increase in the cost of equity, the bank lowered Agricultural Bank of China's profit forecast for 2026 and 2027 by 1% to 2%, with the H-share target price lowered from 6.32 Hong Kong dollars to 5.8 Hong Kong dollars, and the A-share target price lowered from 7.32 yuan to 6.4 yuan, maintaining a "neutral" rating for H-shares and an "underperform" rating for A-shares.