00023 Should I Buy

The analyst rating from UBS is based on several factors: 1. Improved Net Interest Income: The report highlights that the average one-month HIBOR has increased, providing strong support for banks' net interest income. It is expected that Hong Kong banks' net interest income in 4Q25 will surpass that of 3Q25, which is a positive indicator for the banks' financial performance. 2. Cautious Outlook on Credit Risks: Despite the positive outlook on net interest income, UBS cautions about rising non-performing loan risks, particularly in the context of renewed market concerns over China's commercial real estate sector. This has led to an increase in credit cost forecasts for specific banks. 3. Focus on 2026 Earnings Prospects: UBS maintains a cautious outlook for Hong Kong banks moving into 2026, indicating that net interest income and credit costs will be key drivers of performance. 4. Target Price Adjustments: The ratings of Neutral for BOC HONG KONG and BANK OF E ASIA were reiterated, but target prices were lifted due to a reduction in equity costs following the Fed's rate cuts. Overall, the rating reflects a balance between the positive impact of increased net interest income and the potential risks associated with rising credit costs.