Daiwa Research lowered its target price for Bank of China (BOC)(03988) to HK$3.7 from HK$3.9 and maintained its "outperform" rating.
After BOC's 1H results and recent capital-raising activities, the research house revised its forecasts to factor in the new updates.
Moving into 2H, Daiwa expects its NIM to be negatively affected by China's LPR (Loan Prime Rate) reform and rising deposit competition, as well as potential Fed rate cuts due to its larger overseas operations versus peers. That leads to lower NIM and PPOP.
Daiwa cut its 2019-20 EPS forecasts by 4-6% to factor in its lower NIM, higher credit cost and preference share dividend forecasts.
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