Goldman Sachs has issued a research report indicating an upward revision of its forecasts for Bank of China's average pre-provision profits and net profits after tax for the years 2026 to 2028. The adjustments, which reflect the bank's performance in the fourth quarter of last year and guidance from management, involve increases of 0.6% and 0.4%, respectively.
The target price for Bank of China's H-shares has been raised from HK$4.95 to HK$5.35. Concurrently, the target price for the bank's A-shares has been increased from 6.54 yuan to 6.69 yuan. Both the H-share and A-share ratings have been maintained at "Buy."
Bank of China's fourth-quarter results surpassed expectations, with pre-provision profits and net profits after tax rising by 8% and 5% year-on-year, respectively. These figures were 8% and 3% higher than the bank's own projections.
During the earnings presentation, management indicated that, benefiting from stabilized asset returns and reduced funding costs due to deposit repricing, the contraction in the net interest margin for 2026 is expected to slow significantly. Furthermore, net interest income is anticipated to achieve positive growth. Through adjustments to the asset-liability structure, the impact of potential interest rate cuts by the U.S. Federal Reserve is projected to be neutral, with no adverse effect on the net interest margin.
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