UBS: Raise BOC Hong Kong (02388) target price to HK$52.5 to maintain “neutral” rating

The Zhitong Finance App learned that UBS released a research report stating that it raised the target price of BOCHK Hong Kong (02388) by 20.7%, from HK$43.5 to HK$52.5, maintaining a “neutral” rating.

The bank will raise the company's 2026-2030 earnings estimate by 0-7% to reflect assumptions of net interest income (NII) growth and lower credit costs, and increase dividends per share to account for a potential special dividend. As a result, the target price was raised, but since the expected return on shareholders' equity (ROE) is 12% in 2026, the rating is maintained.

Bank of China Hong Kong will report second-quarter results in August. The bank's model expects net interest income to increase 2.1% quarterly and 8% year-on-year through high-consolidation net interest income, mainly due to an average one-month HIBOR increase, accelerated loans, and expansion of interest-bearing assets (AIEA). The bank expects the company's operating profit before provision (pPOP) to improve slightly by 0.5% year over year. The first half of the year is likely to set the tone for credit costs throughout the year. Credit costs for FY2026, as previously indicated by management, will decrease year over year.

Commercial real estate risk in mainland China and Hong Kong remains an important fluctuating factor, but the bank believes this factor is stabilizing. As a result, the bank believes that the downward pressure on the company's commercial real estate-related asset portfolio is limited, which may help ease the pressure on credit costs.