UBS issued a research report indicating that BOC Hong Kong (02388) reported a full-year net profit of HK$34.121 billion, up 4.9% year-on-year, exceeding both the bank's and market expectations, primarily driven by strong net interest income and net interest margin. Fourth-quarter operating profit increased 5% year-on-year, supported by a 13.8% rise in revenue and a 15.8% growth in pre-provision profit. Impairment provisions rose 80.3% year-on-year, largely in line with expectations, mainly reflecting increased provisions for mainland China commercial real estate clients. It is estimated that fourth-quarter credit costs reached 73 basis points. Full-year dividends per share were HK$2.125, with a payout ratio of 56%, meeting expectations. UBS raised its 2026 earnings per share forecast for BOC Hong Kong by 4% and increased the target price from HK$40 to HK$43.5, while maintaining a "Neutral" rating. The bank noted that fourth-quarter revenue grew 13.8% year-on-year, mainly due to a 7.3% increase in net interest income and growth in other non-interest income. However, net fee income fell 10.6% year-on-year, affected by weak capital market activity. The growth in net interest income benefited from a 6.4% increase in average interest-earning assets and a rebound in the net interest margin to 1.71%, expanding 17 basis points quarter-on-quarter. Loans grew 2.3% year-on-year, with Hong Kong-used loans rising 3.7% and loans used outside Hong Kong declining 0.9%. Deposits increased 7.9% year-on-year, with current and savings deposits up 24.3%, while time deposits fell 6.2%. The ratio of current and savings deposits rose 0.4 percentage points quarter-on-quarter to 53.4%.