In a report released yesterday, Sam Wong from Jefferies maintained a Buy rating on BOC Hong Kong (Holdings) (BNKHF – Research Report), with a price target of HK$26.50.
Sam Wong has given his Buy rating due to a combination of factors that indicate a strong performance by BOC Hong Kong (Holdings). First, the bank’s first-quarter results for 2024 showed an impressive operating profit that surpassed expectations, with a significant year-over-year and quarter-over-quarter increase. This was largely attributed to a robust growth in non-interest income, which exceeded forecasts and displayed a diversified revenue stream beyond traditional interest income. Additionally, the bank demonstrated prudent cost control measures, which resulted in an improved cost-to-income ratio, indicating increased operational efficiency.
Moreover, Sam Wong’s recommendation reflects the bank’s resilience in asset quality, with an improved cost of risk and a stable non-performing loan ratio showcasing the bank’s effective risk management. Despite a slight moderation in net interest margin, the overall growth in loans and deposits was ahead of the market, underlining the bank’s competitive strength. These factors, combined with the bank’s progress in expanding its non-interest income business and maintaining asset quality, lead to the expectation of a positive reception from the market and contribute to the rationale behind the Buy rating.
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BOC Hong Kong (Holdings) (BNKHF) Company Description:
BOC Hong Kong (Holdings) Ltd. is an investment holding company, which engages in the provision of banking and related financial services. It operates through the following segments: Personal Banking, Corporate Banking, Treasury, Insurance, and Others. The Personal Banking and Corporate Banking segments provide offers general banking services, including various deposit products, overdrafts, loans, credit cards, trade related products and other credit facilities, investment and insurance products, and foreign currency and derivative products. The Treasury segment manages the funding and liquidity, and the interest rate and foreign exchange positions of the group in addition to proprietary trades. The Insurance segment focuses on long-term life insurance products, including traditional and investment-linked individual life insurance and group life insurance products. The Others segment relates to the firm’s holdings of premises, investment properties, equity investments and interests inassociates and joint ventures. The company was founded on September 12, 2001 and is headquartered in Hong Kong.
