Zhi Tong Cai Jing·2025-10-14 07:20Core Viewpoint - Guosen Securities (Hong Kong) initiates coverage on Bank of China Hong Kong (02388) with an "Outperform" rating, projecting net profit for 2025-2027 at HKD 38.9 billion, 40.2 billion, and 42.7 billion respectively, indicating year-on-year growth of 1.8%, 3.4%, and 6.2% [1] Group 1: Revenue and Profit Growth - The company achieved operating revenue of HKD 40 billion in the first half of 2025, reflecting a year-on-year increase of 13.3%; net profit attributable to shareholders for the same period was HKD 22.2 billion, up 10.5% year-on-year [1] - The annualized weighted average ROE for the first half of 2025 was 12.9%, an increase of 0.5 percentage points year-on-year [1] Group 2: Asset Growth - As of June 30, the company's total assets grew by 10.0% year-on-year to HKD 4.40 trillion, with a 4.9% increase compared to the beginning of the year; market share remained stable [2] - Deposits increased by 5.8% year-on-year to HKD 2.87 trillion, while total loans rose by 2.0% year-on-year to HKD 1.71 trillion [2] - The common equity tier 1 capital ratio was 20.05% as of June 30, up 0.03 percentage points from the beginning of the year [2] Group 3: Net Interest Margin and Income - The average net interest margin for the first half of 2025 was 1.34%, a decrease of 12 basis points year-on-year, with net interest income declining by 3.5% to HKD 25.1 billion [3] - The decline in net interest margin is attributed to the Federal Reserve entering a rate-cutting cycle, leading to lower market interest rates compared to the previous year [3] Group 4: Non-Interest Income Growth - Net fee income increased by 25.8% year-on-year in the first half of 2025, driven by a recovery in investment market sentiment and increased demand for wealth management services [4] - Other non-interest income surged by 99.1% year-on-year, primarily due to rising global market trading revenues and increased prices for foreign exchange-related products [4] Group 5: Asset Quality - The estimated non-performing loan generation rate was 0.40% in the first half of 2025, up 0.32 percentage points year-on-year; the credit cost rate was 0.40%, an increase of 0.16 percentage points year-on-year [5] - As of June 30, the impaired loan ratio was 1.02%, down 0.03 percentage points from the beginning of the year, with a provision coverage ratio of 86%, up 1 percentage point from the beginning of the year [5] - Despite an upward trend in the impaired loan ratio since 2022, the company's asset quality remains superior compared to the industry average [5]