[ET Net News Agency, 21 February 2018] Citi Research cited Hang Seng Bank's
(HSB)(00011) management in an analyst meeting post its FY2017 results sounding positive on
NIM and loan growth outlook in 2018, a positive read across to the HK banks sector, which
has underperformed HSI and Asia regional banks year-to-day.
The research house believes current share price weakness provides a good buying
opportunity in the sector.
On the back of positive macroeconomic environment, HSB management expects the strong 15%
yoy loan growth to sustain into 2018, which is much higher than consensus loan growth
estimates of 7% yoy.
While the NIM expansion was limited by loan spread compression, management is cautiously
optimistic that the worst might be behind as limited further downside to mortgage margin
which is already thin, and commercial property loan margin stabilised in 4Q 2017.
As long as interest rates remain low, Citi expects benign asset quality issues for HSB.
As interest rates move higher, areas that of concerns are new lending and unsecured
lending. Citi retained its "neutral" rating on HSB is mainly due to its premium valuation
versus the sector, with a target price of HK$190. (KL)