Goldman Sachs: Maintains "neutral" rating on BANK OF E ASIA (00023) and raises target price to 10.7 Hong Kong dollars.

Goldman Sachs released a research report stating that it maintains a "neutral" rating for BANK OF E ASIA (00023) with a target price raised from 9.6 Hong Kong dollars to 10.7 Hong Kong dollars. The bank expects the borrowing costs for East Asia to gradually return to normal from 2021 to 2027, currently estimated at 78, 73, and 70 basis points respectively. Overall, the bank raised the company's earnings per share for the next two years by 17% and 11% respectively, and expects earnings per share to be 1.73 Hong Kong dollars in 2027. Goldman Sachs pointed out that BANK OF E ASIA's earnings per share for the second half of last year were 0.83 Hong Kong dollars, exceeding its expectations. The revenue for the second half of last year was 4% higher than expected due to higher net interest and fee income. Operating expenses for the second half of last year were 4% lower than expected, leading to a 12% higher profit before provisions than expected. The bank's overall commercial real estate lending accounts for 23% of its total loan portfolio, slightly lower than 25% in 2023. The average loan-to-value ratio for commercial real estate in Hong Kong is 53%, and the overdue account ratio remains at a low level. Management stated that the non-performing loan ratio is under control.