Goldman Sachs has released a research report raising its target price for BOC HONG KONG (02388) from HK$57.8 to HK$59.7, while maintaining a "Buy" rating.
The bank also revised its net profit forecasts for 2026 to 2028 upward by 1.5%, 4.5%, and 0.3% respectively, mainly reflecting a more favorable interest rate outlook following revisions to HIBOR projections, as well as higher loan growth assumptions for 2026 based on system data.
Goldman Sachs expects BOC HONG KONG to announce its third-quarter 2026 results in late October, forecasting net profit of HK$11.5 billion, representing a 28% year-on-year increase and a 1% quarter-on-quarter rise, with pre-provision operating profit up 18% year-on-year but down 1% quarter-on-quarter.
The bank anticipates that BOC HONG KONG's third-quarter net interest income will grow 3% quarter-on-quarter to HK$14.5 billion, supported by a 2.5% quarter-on-quarter increase in loans, with the relevant net interest margin broadly stable at 1.37%.
Goldman Sachs forecasts net fee income to decline 5% quarter-on-quarter to HK$2.8 billion, reflecting weaker wealth management fee income, partially offset by a recovery in insurance business, while other non-interest income is expected to fall 11% quarter-on-quarter.
The bank expects BOC HONG KONG's asset quality trends to remain broadly stable, with third-quarter credit costs forecast at 25 basis points, below the 38 basis points recorded in the second quarter.
Overall, despite weaker quarter-on-quarter performance in non-interest income, stronger net interest income and lower provisions should support earnings to remain broadly flat on a quarter-on-quarter basis.
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