Daiwa has released a research report initiating coverage on CM Bank (03968) with an "Outperform" rating and a target price of HK$56.3, citing a turning point in fee income that is set to restore its earnings advantage.

The brokerage noted that CM Bank's fee income declined by a cumulative 23% from 2021 to 2024, primarily due to regulatory adjustments rather than any erosion of its franchise value. However, a recovery is already underway, with net fee income projected to grow 4% in 2025 and 6% year-on-year in the first half of 2026.

Daiwa forecasts net fee income growth of 8% to 8.4% between 2026 and 2028. Simultaneously, it expects total operating revenue to rise 6% to 7% year-on-year during the same period, with net profit growing at a slightly faster clip of 6% to 8% annually.