What do investors care about most in this earnings season? MSCI China Banks/MSCI China Banks-A have gained 21.3%/12.4% YTD (as of 17 Oct) but notably underperformed the MSCI China (+32.7%). In particular, since July, the strong performance of growth stocks and slow recovery of bank fundamentals led to some outflow from bank stocks. That said, in the recent two weeks, the increased uncertainty around tariffs and other non-trade issues between China and the US have prompted a rally in China bank stocks, i.e., ...

Core Viewpoint - Citigroup reports that Bank of China Hong Kong is expected to announce its Q3 2025 operating results in late October, forecasting an operating profit of HKD 11.2 billion, representing a quarter-on-quarter decrease of 18% and a year-on-year decline of 14% [1] Financial Performance - Total revenue is projected to decrease by 6% year-on-year to HKD 17.3 billion, primarily due to weakened trading income [1] - Net interest margin is expected to remain resilient, benefiting from improved funding costs and normalization of HIBOR [1] - Credit costs are anticipated to remain high at approximately 40 basis points, given the ongoing pressure in the commercial real estate market [1] Stock Performance and Ratings - Bank of China Hong Kong's stock price has recently retreated from its September highs, likely influenced by outflows of southbound funds and market concerns regarding net interest margin and trading income [1] - Citigroup's earnings forecasts for Bank of China Hong Kong for 2025 and 2026 are 1% and 3% higher than market consensus, respectively [1] - The rating is maintained at "Buy," with a slight adjustment of the target price from HKD 41 to HKD 40.9 [1]

小摩进行敏感度测试显示，对于汇控，2025年信贷成本潜在上升可能为6个基点，或2025年下半年年化 增加13个基点，将使汇丰2025财年盈利减少1.6%。在正面方面，摩通计算不良贷款处置可能导致因预 期损失过剩而释放13亿美元资本。即使考虑潜在盈利下行，核心一级资本比率的净影响可能为提升12个 基点，从而增加回购股份的容量。 摩根大通发布研报称，予汇丰控股(00005)目标价122港元，维持"增持"评级。机构上周曾报道，汇丰控 股已指示其子公司恒生银行(00011)处置其香港商业地产(CRE)组合内的不良债务。摩通认为，若消息兑 现，汇丰股价存在上行潜力，因资本释放的好处超过信贷成本潜在上升。 ...

小摩进行敏感度测试显示，对于汇控，2025年信贷成本潜在上升可能为6个基点，或2025年下半年年化 增加13个基点，将使汇丰2025财年盈利减少1.6%。在正面方面，摩通计算不良贷款处置可能导致因预 期损失过剩而释放13亿美元资本。即使考虑潜在盈利下行，核心一级资本比率的净影响可能为提升12个 基点，从而增加回购股份的容量。 智通财经APP获悉，摩根大通发布研报称，予汇丰控股(00005)目标价122港元，维持"增持"评级。机构 上周曾报道，汇丰控股已指示其子公司恒生银行(00011)处置其香港商业地产(CRE)组合内的不良债务。 摩通认为，若消息兑现，汇丰股价存在上行潜力，因资本释放的好处超过信贷成本潜在上升。 ...

Group 1 - Goldman Sachs reported that East Asia Bank's (00023) first-half revenue met expectations, but net interest income and fee income were below forecasts, offset by trading gains [1] - Earnings per share exceeded Goldman Sachs' expectations by 14%, with a dividend payout ratio of 45%, slightly below the forecast of 47% [1] - The interim dividend was set at 39 HKD cents, approximately 10% higher than Goldman Sachs' estimate of 35 HKD cents [1] Group 2 - Goldman Sachs raised its earnings per share estimates for East Asia Bank for the fiscal years 2025 to 2027 by 8%, 11%, and 24%, respectively, and increased the target price by 12% from 10.5 HKD to 11.8 HKD, maintaining a "sell" rating [1] - The management of East Asia Bank anticipates headwinds for net interest margin in the second half of 2025 and maintains a conservative outlook on loan growth [1] - Loan growth is projected to be 2.1%, 2.8%, and 4% year-on-year for the fiscal years 2025 to 2027, with deposit growth estimates adjusted to 5.5%, 3.9%, and 2.9% [1] Group 3 - Goldman Sachs assumes a net interest margin sensitivity (NIM beta) of 0.16 for the current interest rate cut cycle, slightly lower than the previous period [2] - Net interest margin forecasts for East Asia Bank for fiscal years 2025, 2026, and 2027 are 1.78%, 1.8%, and 1.75%, with corresponding net interest income expected to decline by 15%, increase by 5%, and increase by 0.4% [2] - Non-interest income estimates for fiscal years 2025 to 2027 have been raised by 11%, 8%, and 6% due to better-than-expected trading income performance [2] Group 4 - Credit costs for East Asia Bank are expected to be 97 basis points this year, normalizing to 80 and 55 basis points in 2026 and 2027, respectively [2] - Projected dividend payout ratios for fiscal years 2025, 2026, and 2027 are 46%, 49%, and 51%, indicating an average payout ratio of 49% over the next three years, compared to an average of about 40% over the past five years [2]

Core Viewpoint - Goldman Sachs reported that HSBC Holdings (00005) exceeded both the bank's and market's expectations for core earnings in Q2 by 9% and 10% respectively, driven by strong pre-provision profit (PPOP) and better-than-expected non-bank net interest income performance [1] Financial Performance - HSBC's revenue surpassed expectations, primarily due to robust non-bank net interest income [1] - The target price was slightly raised from HKD 109 to HKD 110, maintaining a "Buy" rating [1] Management Guidance - Management reiterated guidance for bank net interest income to reach approximately USD 42 billion by 2025, with cost growth around 3% and a return on tangible equity (ROTE) of 14% to 16% from 2025 to 2027 [1] - The annual credit cost guidance was adjusted upwards to approximately 40 basis points [1] Interest Rate Impact - HSBC management anticipates that if the HIBOR remains at the current level of about 1%, it will negatively impact bank net interest income by approximately USD 1 million per month [1] Earnings Forecast Adjustments - Goldman Sachs slightly raised its bank net interest income forecasts for 2025 to 2027 to USD 41.9 billion, USD 43 billion, and USD 44.1 billion, exceeding market expectations by up to 4% [1] - Earnings per share forecasts for 2025 to 2029 were adjusted upwards by 6%, 5%, 4%, 3%, and 2% respectively based on the revised profit forecasts [1]

Core Viewpoint - Citigroup's report indicates that higher-than-expected credit costs may bring short-term uncertainty to Hang Seng Bank (00011), although the HKD 3 billion share buyback is likely to be well-received by the market, with focus shifting to credit cost outlook [1] Financial Performance Summary - Hang Seng Bank's net profit for the first half of 2025 is projected at HKD 6.3 billion, representing a 22% decrease from the previous half and a 35% year-on-year decline [1] - Operating profit is expected to be HKD 8.5 billion, down 16% from the previous half and 25% year-on-year, which is 14% lower than consensus expectations, primarily due to increased provisions [1] - Total revenue is forecasted to decline by 1% from the previous half but increase by 3% year-on-year, exceeding market expectations by 2%, driven by strong non-interest income [1] - Operating expenses are anticipated to be HKD 7.6 billion, down 1% from the previous half and up 1% year-on-year, which is 2% lower than consensus expectations [1] Provision and Credit Cost Analysis - Provision expenses have risen to HKD 4.9 billion, marking a 49% increase from the previous half and a staggering 224% year-on-year increase, mainly due to increased provisions for Hong Kong commercial real estate (CRE) [2] - The expected credit loss (ECL) model adjustments have led to an additional expense of HKD 640 million [2] - The non-performing loan (NPL) ratio has increased by 0.6 percentage points to 6.7% compared to the end of last year, with the NPL ratio for Hong Kong commercial real estate rising by 5 percentage points to 20% [2]