Komo: The Bank of Hong Kong's first half results beat expectations, and earnings per share forecast have room for improvement

The Zhitong Finance App learned that J.P. Morgan Chase released the Hong Kong Stock Banking Research Report that the Bank of Hong Kong's overall performance for the first half of 2026 was better than expected, mainly supported by non-net interest income, and the operating profit momentum before preparation was more resilient and better than expected. Credit costs for small and medium banks are still high, but large banks are doing better.

In terms of negative factors, the total shareholder return indicators for HSBC Holdings (00005), Standard Chartered Group (02888), and Bank of China Hong Kong (02388) were all slightly lower than expected. The bank expects that there is room for an increase in the market's earnings per share forecast, and the market's rising expectations of the Fed's interest rate hike will also help support stock price sentiment. The bank maintains a positive view of the industry. The priorities for major banks are Standard Chartered Group, HSBC Holdings, and BOC Hong Kong. The target prices are HK$310, HK$205 and HK$53.3, respectively. The ratings are also “increase in holdings”.

According to the report, the Bank of Hong Kong covered by the bank saw an average year-on-year increase of 33% year-on-year in the first half of 2026, a marked improvement over the 4% year-on-year increase in the full year of 2025. However, it was mainly driven by a 50% rebound in HSB/Hang Seng Bank (HBAP/HSB) profits, driven by a sharp drop in credit costs and improvements in non-operating projects. The profit growth of other banks ranged from high units to low double digits, mainly driven by resilient and better-than-expected operating profit growth before provision.

According to the report, the net interest spreads of most banks narrowed month-on-month in the first half of 2026, which is not really surprising due to the low interbank interest rate in Hong Kong during the period; however, there is still some uncertainty about the forward-looking guidelines. The positive factor is that return on assets should remain resilient, while the negative factor is that under deposit competition and steeper yield curves, capital cost management may be more challenging. Balance sheet expansion should support at least a unit of net interest income growth over the next 12 to 18 months.