Core Insights - The Hong Kong banking sector remains robust, with retail banks' pre-tax operating profit increasing by 13.4% in the first half of 2025 compared to the same period in 2024, driven by income from foreign exchange and derivatives, as well as increased fees and commissions [1][2] - The overall return on assets for banks rose to 1.27% in the first half of 2025, up from 1.19% in the same period of 2024 [1] Banking Sector Performance - The net interest margin for retail banks narrowed from 1.51% in 2024 to 1.47% in the first half of 2025 due to a decline in Hong Kong dollar interest rates [2] - The three-month Hong Kong Interbank Offered Rate (HIBOR) dropped by 269 basis points to 1.68% by the end of June 2025, influenced by an expansion in the banking system's surplus liquidity [2] - The total capital ratio for locally registered authorized institutions stood at a high of 24.4% at the end of the first half of 2025, significantly above the international minimum standard of 8% [2] Asset Quality and Loan Performance - The total classified loan ratio slightly increased from 1.96% at the end of December 2024 to 1.97% by the end of June 2025, indicating manageable asset quality risks [2] - The overdue and restructured loan ratio rose from 1.55% to 1.58% during the same period, but overall asset quality remains under control [2] Household Debt and Personal Loans - Household debt grew by 1.8% in the first half of 2025, surpassing the 0.6% increase in the second half of 2024, with residential mortgage loans increasing by 1.2% due to higher property transactions [3] - The Hong Kong Monetary Authority (HKMA) monitors household debt closely, with most being regulated under a macroprudential framework [3] SME Loan Situation - Local corporate loans increased by 2.4% in the first half of 2025, marking the first positive growth since the first half of 2023, with notable growth in loans to the electricity, gas, and information technology sectors [4] - The HKMA and the banking sector continue to support SMEs, with special funding for SMEs exceeding HKD 390 billion [4] - The total amount of loans related to mainland China increased from HKD 387.3 billion at the end of 2024 to HKD 402.3 billion by the end of June 2025, with a decrease in the classified loan ratio from 2.37% to 2.16% [4]

Core Viewpoint - Oriental Holdings (00430) anticipates a significant increase in consolidated profit before tax for the six months ending June 30, 2025, projected to be between approximately HKD 4.8 million and HKD 5.3 million, compared to HKD 3.3 million for the same period ending June 30, 2024 [1] Financial Performance - The financial performance of the group is expected to improve significantly due to the relatively low level of the Hong Kong Interbank Offered Rate (HIBOR), which has led to a decrease in financing costs [1]

Core Viewpoint - The company expects a significant increase in pre-tax profit for the six months ending June 30, 2025, compared to the same period in 2024, indicating strong financial performance improvement [1] Financial Performance - The anticipated pre-tax profit for the period is projected to be between approximately HKD 280 million and HKD 320 million, a substantial increase from the HKD 167 million recorded for the six months ending June 30, 2024 [1] - The improvement in financial performance is primarily attributed to an increase in the net fair value gains of financial assets measured at fair value through profit or loss [1] - Additionally, the relatively low level of the Hong Kong Interbank Offered Rate (HIBOR) has contributed to a decrease in financing costs [1]

Core Viewpoint - Oriental Holdings (00430) expects a significant increase in consolidated profit before tax for the six months ending June 30, 2025, projected to be between approximately HKD 4.8 million and HKD 5.3 million, compared to HKD 3.3 million for the same period ending June 30, 2024 [1] Financial Performance - The financial performance of the group has improved significantly due to the relatively low level of the Hong Kong Interbank Offered Rate (HIBOR), which has led to a decrease in financing costs [1]

Core Viewpoint - DBS Bank predicts that the 3-month Hong Kong Interbank Offered Rate (Hibor) will rise to 2.05% by the end of the year due to expected market changes [1] Group 1: Hibor Trends - Current low levels of Hibor are attributed to ample liquidity in Hong Kong's banking system [1] - The 3-month Hibor is expected to gradually rebound in the coming months, reaching 2.05% by year-end [1] - The 1-month Hibor is also anticipated to increase slightly, projected to reach 1.55% by the end of the year [1] Group 2: Currency and Intervention - The USD/HKD exchange rate remains around 7.85, prompting the Hong Kong Monetary Authority to continue its intervention in the short term [1] - A spread of over 250 basis points between 3-month Hibor and SOFR will help maintain the HKD within its weak trading range [1] - The expected weakening of the USD may lead to a moderate pace of intervention [1] Group 3: Federal Reserve Influence - Anticipated interest rate cuts by the Federal Reserve are expected to cushion the upward movement of Hong Kong interest rates [1]

Group 1 - UBS forecasts a significant decline in Hang Seng Bank's (00011) earnings per share for the first half of this year due to compression in net interest income (NII) and an expected rise in expected credit loss (ECL) expenses [1] - The bank is currently trading at 1.3 times the one-year forward price-to-book ratio, with a target price of HKD 112 and an estimated dividend yield of 5.4% for 2025 based on the target price [1] - Hang Seng Bank is expected to announce a new share buyback plan alongside its earnings report on July 30, despite a weak profit outlook [1] Group 2 - UBS notes that the Hong Kong Interbank Offered Rate (HIBOR) has remained below 1% for a month, deviating from seasonal patterns, and predicts HIBOR will stabilize between 2% and 2.5% by year-end [2] - As a result of the low HIBOR environment, UBS has revised down its forecast for Hang Seng Bank's NII for 2025, while slightly increasing the forecast for non-interest income due to potential boosts in net fee income and trading income [2] - UBS has also slightly raised its estimate for ECL expenses for Hang Seng Bank in light of cautious views on non-performing loan (NPL) risks [2]