BofA Securities has released a research report increasing its 2026-2028 earnings forecasts for BOC HONG KONG (02388) by 6-9%, with the target price raised from HK$42.2 to HK$50.25. The firm maintains a "Neutral" rating, stating that the bank's solid earnings outlook and capital return initiatives have largely been reflected in its strong year-to-date share price performance and valuation.

BofA Securities expects BOC HONG KONG's second-quarter loan growth to remain broadly flat quarter-on-quarter, while net interest income should see a modest sequential increase, supported by a favorable interest rate environment. Although fee income and trading income may both decline slightly year-on-year in the first half, the 2026 fiscal year should see a recovery from the lower base of the second half of last year. The cost-to-income ratio is expected to stay stable after reaching 22% in the first quarter, reflecting a balance between cost control and growth investments.

The report indicates that BOC HONG KONG's asset quality remains stable, with no significant deterioration observed across any portfolios. While credit costs may rise quarter-on-quarter in the second quarter due to seasonal factors, management guidance suggests that credit costs for both the first half and the 2026 fiscal year will decline year-on-year. As the Hong Kong property market stabilizes, pressure on investment property revaluation has eased significantly, providing additional support to earnings. Overall, the bank expects first-half profit to grow by approximately 8% year-on-year.