Ge Long Hui·2025-10-13 03:35Core Viewpoint - The company has shown strong revenue and profit growth in the first half of 2025, with a notable increase in non-interest income, despite a decline in net interest margin due to the Federal Reserve's interest rate cuts [1][2]. Financial Performance - The company achieved a revenue of 40 billion HKD in the first half of 2025, representing a year-on-year growth of 13.3% [1]. - The net profit attributable to shareholders reached 22.2 billion HKD, up 10.5% year-on-year [1]. - The annualized weighted average ROE was 12.9%, an increase of 0.5 percentage points compared to the previous year [1]. Asset Growth - Total assets grew by 10.0% year-on-year to 4.4 trillion HKD as of June, with a 4.9% increase since the beginning of the year [1]. - Deposits increased by 5.8% year-to-date to 2.87 trillion HKD, while total loans rose by 2.0% to 1.71 trillion HKD [1]. - The common equity tier 1 capital ratio was 20.05%, up 0.03 percentage points from the start of the year [1]. Interest Margin and Income - The average net interest margin for the first half was 1.34%, down 12 basis points year-on-year, leading to a 3.5% decline in net interest income to 25.1 billion HKD [1]. - The decrease in net interest margin is attributed to the Federal Reserve's interest rate cuts and lower market rates compared to the previous year [1]. Non-Interest Income - Net fee income grew by 25.8% year-on-year, driven by a recovery in investment market sentiment and increased demand for wealth management services [2]. - Other non-interest income surged by 99.1%, primarily due to higher global market trading revenues and increased prices for foreign exchange-related products [2]. Asset Quality - The non-performing loan generation rate increased to 0.40%, up 0.32 percentage points year-on-year, while the credit cost ratio also rose to 0.40%, an increase of 0.16 percentage points [2]. - The non-performing loan ratio was 1.02% as of June, a slight decrease of 0.03 percentage points from the beginning of the year, indicating relatively strong asset quality compared to the industry [2]. - The provision coverage ratio improved to 86%, up 1 percentage point from the start of the year [2]. Investment Outlook - The company is projected to achieve net profits of 38.9 billion HKD, 40.2 billion HKD, and 42.7 billion HKD for 2025-2027, with respective year-on-year growth rates of 1.8%, 3.4%, and 6.2% [3]. - The estimated EPS for the same period is 3.68, 3.81, and 4.04 HKD, with corresponding PE ratios of 10.0, 9.7, and 9.1 times [3]. - The reasonable stock price range is estimated to be between 43.6 and 48.4 HKD, indicating a potential upside of approximately 18% to 31% compared to the closing price on October 10 [3].