[ET Net News Agency, 28 April 2020] UBS Global Research cut its target price for BOC
Hong Kong (BOCHK)(02388) to HK$24.6 from HK$30.8 and downgraded its rating to "neutral"
from "buy".
With HIBOR projected to fall below 1%, the research house expects BOCHK's NIM (net
interest margin) to drop by 28bp on an adjusted basis to 1.42% by the end of 2021 versus
the level seen in 2H 2019.
UBS expects ROA (return on assets) to decline by around 20bp in the medium term to 0.88%
and FCF (free cash flow) to fall short of 2019 dividends until 2025. It also factored in
an additional 1.5% loan-loss on top of its forecasts to reflect market concerns on asset
quality. (KL)