Jefferies has issued a research report assigning BOC Hong Kong (02388) a target price of 48 HKD and a "Hold" rating. The report summarizes key points from the bank's corporate day, focusing on its ASEAN business strategy, opportunities from Chinese enterprises expanding overseas, and the internationalization of the renminbi. Hong Kong remains the core market, and Jefferies expects the positive trends in net interest margin (NIM) and loan growth to continue into the second quarter. A potential dividend distribution plan is expected to be announced in the first half of 2026. According to the report, while ASEAN operations currently represent a small portion, they are growing rapidly. ASEAN business accounts for only 3.2% of BOC Hong Kong's total loans and 5.8% of its FY2025 operating revenue on a currency-adjusted basis. However, it has shown strong growth over the past five years, with operating profit achieving a 12% compound annual growth rate (despite flat loan volume) and deposits growing at a 9% CAGR, both exceeding the bank's overall average. The non-performing loan ratio for this segment has decreased from 2.78% in 2024 to 2.11%. BOC (Malaysia) serves as the flagship institution in the ASEAN region (representing approximately 1% of BOC Hong Kong's FY2025 loans and operating revenue, with an 11% loan CAGR over ten years). It employs a localized model to serve both large Malaysian corporates and Chinese enterprise clients (over 1,300 accounts, with 40% expected to be added between 2023 and 2026). Jefferies noted that Hong Kong interbank offered rates (including one-month and three-month tenors) have edged up slightly since April, benefiting from a robust IPO pipeline (with approximately 470 active applications as of April this year) and the upcoming dividend season. The SOFR-HIBOR spread has widened slightly compared to the first quarter (though most issues have been corrected). Coupled with further stabilization in the Hong Kong property market, Jefferies believes the favorable trends in NIM and loan growth for Hong Kong banks should be maintained in the second quarter.