The Zhitong Finance App learned that Citi released a research report stating that it maintains the Bank of East Asia (00023) “buy” rating, with a target price of HK$16. The bank said that profit attributable to the Bank of East Asia's shareholders in the first half of the year increased 155% month-on-month to HK$2.4 billion, up 7% year-on-year, and 8% higher than market expectations. Revenue was 2% higher than expected, mainly driven by strong non-interest income, and operating expenses were 2% lower than anticipated. The Group announced an interim dividend of HK$0.46 per share, increasing the dividend ratio to 50% from 45% in the same period last year.
Citi pointed out that the company's non-interest revenue performance was outstanding. Expense revenue increased 23% year over year and 16% year over year to HK$1.9 billion, 5% higher than market expectations. It was mainly driven by strong growth in income from wealth management related expenses. Among them, banking insurance expenses increased 25% year over year, and investment product expenses increased 31% year over year. Other non-interest income increased 23% year over year to HK$1.5 billion, 10% higher than market expectations. Total operating expenses remained flat year-on-year to HK$4.8 billion, 2% lower than expected, mainly due to lower property expenses and internet platform fees.
In terms of negative factors, the company's net interest income fell 4% month-on-month to HK$7.7 billion, 1% lower than market expectations, and the net interest spread narrowed by 7 basis points semi-annually. Loan growth remained flat from month to month, with a year-on-year increase of 2%, lower than the growth in loans in the Hong Kong banking system; deposits fell 2% month-on-month. Credit costs remained high, at 108 basis points on an annualized basis. Mainly affected by depreciation related to commercial real estate in the Mainland, the non-performing loan ratio increased slightly by 2 basis points over the previous half year to 2.71%.