BOC Hong Kong (Holdings) (2388.HK) 1H26 Results Review: Operating Profit In Line; Capital Return Plan Announced
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Goldman Sachs reiterates Buy on BOC Hong Kong (Holdings) (2388.HK), in place since April 30, 2026, raising the 12-month target 8% to HK$57.80 from HK$53.30 (two-stage DDM), implying 13.4% upside from HK$50.95. 2Q26 net profit of HK$11.2bn rose 9% yoy and beat GS estimates by 7%, driven mainly by a swing to a positive property revaluation contribution of HK$256mn versus GS's assumed -HK$900mn; 1H26 net profit of HK$23.7bn beat GS by 3% and company-compiled consensus by 5%, with operating profit broadly in line once revaluations are excluded. A second interim dividend of HK$0.29 per share takes 1H26 DPS to HK$0.58. 2Q26 NIM fell to 1.55% and non-interest income dropped 25% yoy, but asset quality improved: the NPL ratio declined qoq to 0.93% and provision coverage rose to 120.2%. The bank announced a capital return plan of at least HK$10.5bn over three years—directionally positive but below GS's HK$12.7bn estimate based on releasing at least 1ppt of capital—with FY26 returns delivered partly through a special dividend of HK$0.2388 per share and FY27-28 formats still under review. The ordinary payout ratio stays within 40-60%, and management guides 2H26 credit costs lower qoq, with FY26 slightly below FY25.
Key exhibits
Exhibit 1
