The Zhitong Finance App learned that DBS has released a research report stating that it reaffirms the Bank of China Hong Kong (02388) “buy” rating. It is expected that the compound annual profit growth rate between 2023 and 2026 will be about 4%. It is expected that the net interest margin will drop year on year this year and next. It is expected that the economic prospects of the Mainland and Hong Kong will stabilize, which can support the mid-term growth of its stock price, but the target price was lowered from HK$29.7 to HK$26.3, and the profit forecast for this year and next two years was lowered by about 3% and 5%.
According to the report, BOCHK's profit in 2023 increased 26.1% year on year, in line with market expectations. The non-performing loan ratio increased 0.52 percentage points year on year to 1.05% year on year, but it is still below the 1.56% level of the industry average. Looking ahead, considering that the mainland economy and commercial real estate market have yet to fully recover, DBS expects BOCHK's bad loan ratio and loan growth to fluctuate, but it is optimistic that the bank has strong ability to select borrowers and has a high exposure to state-owned housing enterprises, so it believes it will continue to outperform its peers.