"Big Banks" Bank of America Securities: HKEX's net profit last year was roughly in line with expectations

Bank of America Securities published a report stating that Hong Kong Exchanges and Clearing (00388.HK) announced a net profit of HKD 17.8 billion for the fiscal year 2025, representing a year-on-year growth of 36%, which is roughly in line with expectations. The average daily trading volume reached HKD 250 billion, an increase of 89% year-on-year, setting a new historical high. Fees related to trading volume also recorded strong growth, contributing to profits, but at the same time set a very high comparative benchmark for 2026.

The report indicated that the fundraising amount for initial public offerings (IPOs) on the Hong Kong Stock Exchange reached HKD 287 billion, a year-on-year increase of 225%. With a strong IPO pipeline, the bank expects the fundraising scale to further expand in 2026. Although a slowdown in growth for 2026 is the base case scenario, the current 28 times expected price-to-earnings ratio for 2026 remains attractive. Based on a decrease in the cost-to-income ratio, the expected earnings for 2026-2027 have been raised by 1-4%. The target price is maintained at HKD 520, reiterating a "Buy" rating