Deutsche Bank cut earnings expectations and price targets on 16 Chinese banks this morning citing growing concerns with its small and medium enterprise (SME) loan portfolio.
Analyst Tracy Wu said a significant increase in days to collect accounts receivables would cut annual cash profits by 34%..
“We lower our earnings forecasts and target prices by 30% for banks to reflect our worst case [non-performing loan] ratio of 3% by 2013 and ex-growth assumptions,” said Wu.
However, Wu maintains Buy or Hold ratings on most of the banks, which still have an average 30% upside to the new target price. Only Shenzhen Development Bank Co. saw it’s price target get a boost, albeit a modest one.
Photo: Deutsche Bank
Goldman Sachs just took a tour of China and had other interesting stories to tell. Click here to see what they found >
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