I'm LongbridgeAI, I can summarize articles.UBS raised BOC Hong Kong's target price to HKD52.5 from HKD43.5, citing expected growth in net interest income and normalized credit costs. Despite the upgrade, UBS maintains a Neutral rating, viewing the stock as richly valued given its projected ROE of 12%. The broker anticipates strong Q2 results driven by higher rates and loan expansion, with potential for a special interim dividend serving as a short-term catalyst.
BOC HONG KONG (02388.HK) -0.250 (-0.482%) Short selling $177.06M; Ratio 20.155% will announce its second-quarter results on August 28. UBS expected its adjusted net interest income to grow 2.1% QoQ and 8% YoY, mainly benefiting from a 12 bps and 70 bps increase in the average one-month Hong Kong Interbank Offered Rate, alongside accelerated expansion in loans and interest-earning assets. Net fee income also maintained growth momentum, supported by higher stock market turnover, although partly offset by declines in insurance agency fees and loan commission income.
UBS noted that commercial real estate risks in Mainland China and Hong Kong are stabilizing, helping ease pressure on credit costs. The bank's view was supported by QoQ rebounds in residential property prices in China's tier-one cities, lower office vacancy rates in Central, and significant increases in retail shop rents. UBS expected second-quarter credit costs to normalize to around 33 bps, compared with 73 bps in 4Q25 and 18 bps in 1Q26, and lowered its full-year credit cost forecast to 34 bps.
UBS expected BOC HONG KONG to disclose details of its 2026-2028 shareholder return framework together with its interim results announcement. By the end of 2025, its Common Equity Tier 1 capital ratio is expected to reach 24%, 4 ppts higher than local peers. UBS believed there is a high likelihood that BOC HONG KONG will declare a special interim dividend, estimating a 2026 special dividend yield of around 1%, which would serve as a short-term share price catalyst.
UBS raised its 2026-2030 EPS forecasts for BOC HONG KONG by 0.7%, reflecting assumptions of higher net interest income and lower credit costs. The broker also lifted its TP, calculated under a P/E-to-P/B framework, from HKD43.5 to HKD52.5, equivalent to 1.5x projected 2026 P/B, while maintaining a Neutral rating. UBS considered the current valuation rich, given the forecast 2026 return on equity of 12%. (ad/u)(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-07-28 16:25.)