HSBC Research raises the target price of BOC HONG KONG to HKD 44.5 and slightly increases the target price of BANK OF E ASIA to HKD 15.3

HSBC Research published a report indicating a more optimistic outlook for local banks in Hong Kong, with industry price-to-book ratio revaluation providing favorable references. As Hong Kong interbank offered rates rise, the net interest margin outlook is expected to improve; demand for wealth management and insurance remains strong; and capital return perspectives remain intact.

The bank is optimistic about BOC Hong Kong (02388.HK) and Bank of East Asia (00023.HK), as their total shareholder return rates have growth potential and can seize wealth management-related opportunities, with valuations still lower than local and regional peers with similar return on equity. The bank raised its earnings forecasts for BOC Hong Kong for the fiscal years 2025/2026/2027 by 3.0%, 1.9%, and 2.0%, while for Bank of East Asia, it raised by 0.05%, lowered by 0.1%, and lowered by 2%; the new forecasts reflect a slightly higher net interest margin in the second half of 2025 and moderate growth in fee income starting in 2026, but also include higher credit cost assumptions.

The bank raised the target price for BOC Hong Kong from HKD 42.8 to HKD 44.5, and for Bank of East Asia from HKD 15.2 to HKD 15.3, maintaining a "Buy" rating for both