Goldman Sachs has issued a research report updating its forecasts for BANK OF E ASIA (00023). The firm now anticipates the bank's net profit for the first half of 2026 to reach HK$2.111 billion, representing a 7% year-on-year decline but a significant 123% increase compared to the second half of last year.

Pre-provision operating profit is expected to rise 14% year-on-year and 8% compared to the latter half of the previous year. Goldman Sachs has raised its earnings per share forecasts for BANK OF E ASIA for 2026 through 2028 by 3.9%, 7.2%, and 4% respectively.

These adjustments reflect changes in the three-month Hong Kong dollar interbank rate trajectory and revised expectations for the US Federal Reserve's interest rate path. The firm also increased its forecast for non-interest income growth to an average of approximately 10% annually, nearing the management's target of 14%.

Despite these upward revisions, Goldman Sachs has maintained its 12-month price target at HK$13.5 and reiterated its Sell rating on the stock. The report noted that the improvement relative to the second half of last year is primarily due to a better outlook for the commercial real estate market, leading to reduced revaluation losses on property holdings.

Additionally, income from associates is normalizing following the booking of losses related to Guotong Trust, while fee and other non-interest income continue to show robust growth. However, Goldman Sachs expects net interest income to weaken due to falling interest rates.

The firm also anticipates that credit costs will remain elevated through 2026 and 2027. It believes market focus will center on the commercial real estate markets in Hong Kong and mainland China, the potential impact of Chinese cross-border regulatory measures on banks, and the progress of the bank's wealth management platform expansion.