BOCHK's net profit up 11% to $13.3b in 1H15

It's undeterred by current headwinds.

According to Barclays, management says recent market volatility has not deterred its long term strategy to reposition as a regional bank, given the significant growth opportunities from One Belt One Road, RMB internationalisation and globalization of Chinese corporates over the next few years.

Here's more from Barclays:

BOCHK reported net profit of HK$13,387m, +11 y/y, +7% h/h, 2% above Bloomberg consensus but 10% below our estimates, as net interest margin unexpectedly declined by 10bp h/h to 1.59% (vs our expectations for a stable margin). Other operating trends were strong, with fee income up 19% h/h, boosted by brokerage and wealth management income, and credit cost remained low at 16bps (2H14: 14bps).

Interim DPS of 0.545c was unchanged y/y but payout declined to 43% (1H14: 47%). Management maintains its full year dividend payout range guidance of 40-60% (2014: 48%). We revise our FY15/16/17E profit forecasts down by 7%/5%/2%, reflecting lower net interest income and fee income.

We expect margin to rise in 2H15E (by 5bps), as excess liquidity which was temporarily deployed into short term investment securities and government bonds in 1H are redeployed into loans.

Despite the cut in China’s benchmark interest rates which places some pressure on RMB asset yields, we expect BOCHK to benefit from tightness in offshore RMB liquidity as a net liquidity provider into the CNH interbank market (3M CNH-Hibor averaged 4.8% over the past 2 weeks vs 3.2% in July). We also expect better CNH deployment and a pick up in hedging and FX fee income on the back of the recent volatility.