JPMorgan has released a research report stating that it has updated its financial model for Bank of China Limited (SEHK: 03988), with earnings forecasts for 2026 to 2028 roughly unchanged, adjusted only slightly by 0.0%, -0.1%, and -0.1% respectively.
The bank has raised its price target for Bank of China Limited (SEHK: 03988) for December 2027 from HK$6.7 to HK$7.0, mainly due to a slight upward revision of its long-term average return on equity (ROE) assumption from 9.3% to 9.4%, while maintaining an "Overweight" rating.
The report analyzes that Bank of China Limited (SEHK: 03988) faces manageable risks in coping with tariff impacts. Although the bank's exposure to export-related loans may be higher than that of other banks, JPMorgan believes Chinese exporters are better prepared for tariffs than companies in other regions.
According to sensitivity analysis, if the bad debt ratio for US export-related loans rises to 20%, the impact on Bank of China Limited's (SEHK: 03988) earnings would be approximately 5%, and with all other factors unchanged, the downside risk remains within a manageable range.
Additionally, the report notes that rising market expectations for Federal Reserve rate hikes will provide a positive boost to Bank of China Limited's (SEHK: 03988) overseas earnings.
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