HTSC·2025-07-31 09:36Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of HKD 112.25 [1][9]. Core Insights - The company reported a revenue growth of 5.7% year-on-year for H1 2025, with a pre-tax profit increase of 5.1% [1]. - The board has approved a second dividend of USD 0.10 per share for 2025 and plans to initiate a share buyback of up to USD 3 billion [1]. - The company is experiencing strong growth in wealth management, with non-interest income increasing by 24.8% year-on-year in H1 2025 [3]. - The company has seen total assets, loans, and deposits grow by 8.0%, 4.5%, and 7.8% year-on-year, respectively, as of June [1]. Financial Performance - The net interest margin for Q2 2025 was 1.56%, down 3 basis points from Q1 2025, primarily due to declining yields in Asia [2]. - The banking net interest income for H1 2025 decreased by 4.0% year-on-year, with a guidance of USD 42 billion for the full year [2]. - Non-interest income from wealth management grew by 22.3% in H1 2025, marking six consecutive quarters of double-digit growth [3]. Asset Quality and Provisions - As of June, the non-performing loan ratio was 2.41%, with a provision coverage ratio of 43% [4]. - The company anticipates credit costs for 2025 to be around 0.40%, reflecting ongoing pressures in the Hong Kong commercial real estate sector [4]. - The company has increased its provisions, with expected credit losses rising to USD 1.1 billion for Q2 2025 [4]. Valuation Metrics - The target price corresponds to a price-to-book (PB) ratio of 1.25 for 2025, with a forecasted earnings per share (EPS) of USD 1.23 for 2025 [9]. - The company's current market capitalization is approximately HKD 1,688,949 million, with a closing price of HKD 96.95 as of July 30 [6].