Hang Seng Bank's loan growth prediction rose to 10.1% for 2014

Won't it be affected by QE tapering?

According to Maybank Kim Eng, loan demand for Hang Seng Bank (HSB) should remain strong in 2H13 (+10.8% HoH in 1H13), mainly on wholesale & retail trade loans, infrastructure loans and cross-border commercial loans. 

To avoid deterioration in its CAR and loan-to-deposit ratio, HSB will maintain moderate loan growth in 2014.

Here's more from Maybank Kim Eng:

We raise our loan growth forecast from 9.2% YoY to 10.1% YoY for 2014. With rising USD long-bond yield under QE tapering, HSB may increase the lending spread of some of its corporate loans.

Still, its treasury investment will remain conservative. We forecast its net interest margin (NIM) will remain stable at 1.84% in 2014 (1.84% in 1H13).

Stable asset quality. Like other Hong Kong banks, we believe HSB should see limited new NPLs in 2H13 (NPL ratio of 0.22% in Jun 2013).

However, it has adopted a more conservative provisioning policy for its unsecured personal lending in 1H13. HSB has a good track record of asset quality, given its prudent lending policy and high loan collateral coverage. We expect its credit costs to stay low at 6-7bps in 2013-2015.