Goldman Sachs on BOC Hong Kong (2388.HK): 2026 Asia Leaders Conference Takeaways: Commercial Real Estate Trends, Fee Income and Capital Returns
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At the GS Asia Leaders Conference 2026 in Hong Kong on September 1, Goldman Sachs hosted BOC Hong Kong's (2388.HK) investor relations team, focusing on commercial property trends, fee income, capital returns, loan growth and expenses. Management noted partial stabilization in Hong Kong's office market—Central improving while non-core offices remain under pressure—with retail weak and residential relatively resilient. Brokerage activity improved from Q1 2026, though net fee income remains below 1H25 levels amid more conservative client behavior; conventional fees were broadly stable year-on-year, while insurance-related fees declined as sales shifted toward BOC Life products (reflected in the insurance segment), partly offset by stronger fund distribution; BOC Life's CSM balance continues to grow. BOCHK reaffirmed at least HK$10.5bn in additional shareholder returns for 2026-2028, including roughly HK$2.5bn in 2026, stressing HK$10.5bn should be viewed as a floor. H1 2026 loan growth was led by manufacturing, transportation, financial institutions and IT; management expects further growth in H2 and aims to outperform. Opex rose 6.7% YoY in H1, with slower growth expected in H2. Goldman maintains Buy with a 12-month two-stage DDM target of HK$57.80, 9.7% above the HK$52.70 close; key risks are weaker shareholder returns, lower NIM and asset-quality deterioration.