Ge Long Hui·2025-07-31 03:49Core Insights - Bank of America Securities reported that Hang Seng Bank's revenue for the first half of the year increased by 2.7% year-on-year to HKD 21 billion, with pre-provision profit rising by 3.9% to HKD 13.4 billion, exceeding market expectations by 2% and 6% respectively [1][1][1] - However, net profit fell by 34.6% year-on-year to HKD 6.3 billion, missing market expectations by 22%, primarily due to a doubling of provisions [1][1][1] - The return on equity (ROE) decreased by 4.5 percentage points year-on-year to 7.9% [1][1][1] Financial Ratios and Capital - The Common Equity Tier 1 (CET1) ratio increased by 3.6 percentage points to 21.3% due in part to the implementation of Basel III regulations [1][1][1] - The interim dividend rose by 8.3% year-on-year to HKD 2.6 per share, with the payout ratio increasing by 30 percentage points to 78% [1][1][1] Share Buyback and Earnings Forecast - Hang Seng Bank announced a share buyback plan of up to HKD 3 billion, expected to be completed within six months [1][1][1] - Bank of America Securities lowered its earnings forecasts for Hang Seng Bank for 2025 to 2027 by 10% to 18%, mainly due to rising credit costs, projected at 110 basis points, 85 basis points, and 75 basis points for the respective years [1][1][1] - The cost of equity was reduced by 50 basis points to 8.5% due to a decline in HIBOR, which led to a decrease in the risk-free rate [1][1][1] Target Price Adjustment - The target price for Hang Seng Bank was lowered by 8% from HKD 102 to HKD 93.6, reflecting headwinds in earnings and a low non-performing loan coverage ratio, with a reiterated "underperform" rating [1][1][1]