Q226 preview: decent NPAT growth & increased shareholder return; maintain Neutral, raise PT

Research evidence excerpt

Q226 preview: decent NPAT growth & increased shareholder return; maintain Neutral, raise PT

backdrop, we see limited downgrade pressure for the banks’ CRE portfolio, which

12/27E 4.04 4.31 7 4.34

should help ease credit cost pressure. We expect Q2 credit cost to normalize to c.33bps,

12/28E 4.24 4.41 4 4.60

from 73bps in Q425 and 18bps in Q126, and cut our FY26 credit cost estimate to 34bps.

Helen Li, CFA

Anticipate special dividend yield of c.1% for 2026E, a near-term catalyst Analyst

helen-za.li@ubs.comWe expect the bank to unveil details of its 2026-28 shareholder return framework

+852-2971 6066

alongside the H126 results announcement. Under the current shareholder return policy,

its CET-1 ratio increased to 24.0% as of end-2025, 4ppt above its local bank peers. With May Yan

the bank trading at >1x P/B and its share buyback program still pending regulatory Analyst

may.yan@ubs.com

approval, we believe BOCHK is very likely to announce a special dividend plan at the

+852-2971 7157

H126 results. We forecast a c.1% special dividend yield for FY26, which should serve as

a near-term catalyst for the stock. Jason Napier, CFA

Analyst

jason.napier@ubs.com

Valuation: raise PT to HK$52.5; maintain Neutral

+44-20-7568 5037

We raise our 2026-30E EPS by 0-7%, reflecting higher NII and lower credit cost

assumptions, and lift DPS to factor in potential special dividends. Accordingly, we raise

our PB-ROE-derived PT from HK$43.5 to HK$52.5, implying 1.5x 2026E P/B (from 1.4x)

while keeping the same distribution yield. The higher PT reflects potential consensus

earnings upgrades, supported by decent NII growth and stabilizing NPL risk, and a near-

term catalyst from a special dividend announcement alongside H126 results. However,