BOC Hong Kong Holdings Ltd: 1H26 preview: resilient earnings, capital return in focus

Research evidence excerpt

BOC Hong Kong Holdings Ltd: 1H26 preview: resilient earnings, capital return in focus

1H26 preview and FY26 outlook

NII – supported by current interest rate environment

Adjusted NII increased marginally in 2Q26, although the adjusted NIM declined slightly

QoQ, primarily due to lower swap related elements. Over the past two years, BOCHK has

experienced elevated swap income due to excess liquidity, but it has started to ease as

loan growth outpaces deposit growth and surplus capital declines. The Bank believes the

current interest rate environment will continue to support NII in 2H26.

Loan growth - broad-based expansion continues

Loan growth in 2Q26 is expected to be similar to 1Q26 level. Unlike recent years when

growth was concentrated in a limited number of sectors, the Bank witnessed a more

broad-based loan expansion in 1H26, across manufacturing, transportation, mortgage

sectors, and in both HK and cross-border businesses. ASEAN also remained an important

growth pillar through its role as Bank of China's Asia-Pacific syndicated loan center. The

Bank remained disciplined and emphasized that it has no intention of sacrificing returns

to gain market share.

Deposit growth - focus remains on quality over quantity

BOCHK attributed the slight deposit contraction in 1Q26 (-0.4%) to its deliberate focus

on deposit quality rather than deposit balance growth, and emphasized CASA balances

continued to increase throughout the period, supported by payroll services, cash

management, and wealth management. It returned to deposit growth in 2Q26, with

CASA growth outpaced time deposit growth during the quarter. The Bank highlighted

that its deposit strategy remains centered on franchise quality and pricing discipline.

Fees - stable in 2Q and expect to improve in 2H on low base