CICC: BOC HONG KONG (02388) earnings grow steadily, quarterly dividends stable.

CICC issued a research report stating that BOC HONG KONG (02388) announced its third-quarter results. For the first three quarters of this year, revenue grew 2.3% year-on-year, profit before tax grew 3.7% year-on-year, and profit after tax grew 9% year-on-year; in the third quarter, revenue grew 9% year-on-year and profit before tax grew 13% year-on-year, with results in line with the bank's expectations. The bank maintained its target price of HK$60.1 and its "Outperform" rating unchanged. The bank noted that third-quarter adjusted net interest income grew 5.2% year-on-year and 0.9% quarter-on-quarter. Asset expansion was steady, with deposits and loans at quarter-end up 4.3% and 1.5% quarter-on-quarter respectively, and average interest-earning assets up about 7% year-on-year. However, deposit competition compressed the net interest margin, with third-quarter adjusted net interest margin at 1.52%, narrowing 3 basis points quarter-on-quarter. The bank noted that net fee income fell 11.8% year-on-year, mainly dragged by the high base from insurance and securities brokerage businesses last year, as well as weaker Hong Kong stock market turnover. The cost-to-income ratio remained low at 24.5% for the quarter; credit costs improved both year-on-year and quarter-on-quarter, with annualized credit cost at 0.36% for the quarter. The company declared a quarterly dividend of HK$0.29 per share, flat year-on-year, in line with CICC and market expectations. The bank kept its revenue forecast basically unchanged, but given more intense deposit competition in Hong Kong, it lowered its 2026 and 2027 net profit attributable to shareholders forecasts by 1.5% and 2.6% respectively to HK$41.2 billion and HK$42.2 billion.