Goldman Sachs on Bank of China (3988.HK/601988.SS): Post-2Q26 Results Roadshow Takeaways
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Goldman Sachs published notes from a non-deal roadshow with Bank of China (3988.HK / 601988.SS) management after 1H26 results, maintaining Buy ratings on both the H and A shares with 12-month target prices of HKD5.96 and RMB6.73, based on 2027E target P/PPOP of 3.875x and 4.375x—implying 0.2% and 2.9% upside from September 3 closes. Management said NIM improved further in 2Q26, up about 1bp in 1H26, on deposit repricing and liability optimization; around RMB1 trillion of mostly three-year deposits maturing in 2H26 should sustain funding-cost benefits into 2027, albeit smaller. A 100bp Fed move shifts group NIM by only about 1bp. Property-related NPL balances, ratios and new NPL formation all fell in 1H26, though retail credit remains under pressure with no clear inflection; provision coverage is about 200%. Bond capital gains exceeded RMB10 billion, and fees rose about 0.9% y/y (2.5% ex one-offs), supported by settlement, wealth management and custody. TLAC reached 21.66% versus the 22% requirement effective early 2028; 1H26 ROE was about 8.66%, the payout ratio has held near 30% since 2015, and interim dividends rose 9% y/y. Goldman sees the overseas network, resilient NIM and greater treasury and investment-income exposure as differentiators. Forecasts: 2026-28E net profit of RMB252.9/266.8/284.9 billion and EPS of RMB0.78/0.83/0.88.