Morgan Stanley released a research report saying that BOCHK (02388) maintained a target price of HK$22.2 after the results. The rating was “in sync with the market”, and most of the earnings estimates remained unchanged. In the second half of last year, the company's net interest income was in line with expectations. The net interest spread was 2% lower than the bank's forecast but 1% higher than market expectations; due to the good performance of non-interest income, the non-interest income ratio exceeded expectations.
According to the report, cost control is the key for BOCHK this time, falling short of the bank and market expectations of 9% and 10%. The anticipated provision was 2% lower than the previous forecast, but higher than the market forecast of 8%. The NPL ratio is currently 1.05%. The final dividend of HK$1.145 was positive, higher than the bank's and market expectations of 2% and 6%. The common equity Tier 1 capital ratio (CET1) remains strong at 19%.