The analyst rating from Citi Research is based on several factors:
1. General Performance Expectations: The report indicates that the results of Hong Kong banks are expected to be generally in line with expectations, despite potential revenue upside being offset by higher impairment charges.
2. Net Interest Income Support: The normalization of HIBOR is anticipated to support net interest income in the fourth quarter of 2025.
3. Fee Income Growth Concerns: There is an expectation that fee income growth may slow due to a high base, which could impact overall revenue.
4. Credit Cost Pressures: The bond repayment delay by CHINA VANKE may pressure BOC HONG KONG's credit costs in the fourth quarter of 2025 and into 2026.
5. Preference for International Banks: Citi Research has a preference for international banks, specifically highlighting HSBC HOLDINGS as a top pick due to anticipated positive messages regarding its 2026 targets and potential earnings upsides from improvements in non-interest income.
6. Dividend Payout Forecasts: The broker forecasts an increase in full-year dividend payout ratios for BOC HONG KONG and BANK OF E ASIA, leading to an upward revision of their target prices.
Based on these insights, Citi Research has assigned a "Buy" rating to BOC HONG KONG and a "Neutral" rating to BANK OF E ASIA.
