Bank of E Asia: 1H26 preview: good PPOP, but profit dragged by provisions and IP losses

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Bank of E Asia: 1H26 preview: good PPOP, but profit dragged by provisions and IP losses

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Bank of E Asia

1H26 preview: good PPOP, but profit

dragged by provisions and IP losses

Maintain Rating: UNDERPERFORM | PO: 12.35 HKD | Price: 12.76 HKD

1H26 preview: profit pressured by provisions and IP losses 29 June 2026

We expect BEA’s 1H26 earnings to remain under pressure, with profitability weighed Equity

down by elevated credit costs and investment property (IP) losses despite resilient top-

line growth. Net interest income is projected to grow c.5% YoY, supported by modest

Key Changesloan growth and relatively stable margins. Non-interest income should grow c.12% YoY,

solid but slightly below target, amid weak HK market sentiment and uncertainty from (HK$) Previous Current

China’s new outbound investment rules. Overall, we forecast revenue growth of 6.8% Price Obj. 12.14 12.35

YoY and PPOP growth of 10.5% YoY, but elevated credit costs (>100bp) and IP losses 2026E EPS 1.68 1.73

(c.HKD300mn) are expected to drive a 9.7% YoY decline in net profit after tax. Following 2027E EPS 1.96 2.25

full AT1 redemption, no AT1 distributions will be made in 1H26, and we expect net profit 2028E EPS NA 2.81

attributable to shareholders to decline by 3.9% YoY.

Emma Xu >>

Strategy in place, execution remains key ResearchMerrill LynchAnalyst(Hong Kong)

BEA’s 2026-28 strategy provides a clear framework for recovery, focusing on asset +852 3508 8165 emma.xu@bofa.com

quality improvement, sustainable revenue growth, and technology-driven efficiency. The

Winnie Wu >>

Bank targets full resolution of legacy CRE exposures and credit cost below 60bp by Research Analyst

2028, while driving growth through its OneBank platform, deeper corporate Merrill Lynch (Hong Kong) +852 3508 3058