Bank of China Hong Kong poised to benefit from GBA: analyst

A possible rate hike in March will also positively affect the bank.

Bank of China’s Hong Kong franchise (BOCHK) is expected to be a prime beneficiary of the growth of cross-border financial services in the Greater Bay Area (GBA), according to a study by OCBC Investment Research (IR).

The potential border reopening with Mainland China later this year would be another positive catalyst in driving loan growth and recovering of cross border related fee income, the study added. 

A possible rate hike in March should benefit Hong Kong banks, with BOCHK likely to be amongst the key beneficiaries. 

“Tailwinds from higher rates and its unique position to benefit from the GBA Wealth Connect should support the long-term development,” OCBC IR added.

BOCHK also boasts of a stable net interest margin (NIM). Management guidance for the financial year 2021 NIM is around 1.1%. Fee income also grew 16% in the first nine months of 2021, on the back of a 7% growth from investment-related fee income. During the fourth quarter, the management saw mortgage loan growth but not much growth within corporate loans.

Asset quality also remains stable, with management guiding for credit costs to be lower in 2021 than in 2020.