【2388 Performance】Bank of China Hong Kong earned 5% more last year, paid a final dividend of HKD 1.255, with a current dividend yield of 5.2%.

Bank of China (Hong Kong)
（02388）

It announced its interim results. Profit attributable to shareholders increased by 4.9% year on year to HK$40.121 billion. The company will pay a final dividend of HK$1.255, together with the interim dividends from the previous three times. In the first half of the year, it paid a total dividend of HK$2.125, up 6.8% from the same period last year. The payout ratio was 56%, up 1 percentage point year on year.

Bank of China (Hong Kong) fell 1% on Monday and closed at HK$40.54. Based on this, the stock’s current dividend yield is 5.24 per mille.

Net interest margin down 6 basis points year on year

In the period, net operating income before impairment allowances for withdrawals of Bank of China (Hong Kong) was HK$77.019 billion, up 8.1% year on year. Net interest income was HK$52.911 billion, up 1.1% year on year, net interest margin was 1.4%, down 6 basis points year on year. If the effect of FX swaps is included, net interest margin was 1.58%, down 6 basis points year on year. Operating expenses were HK$18.193 billion, up 4% year on year; the cost-to-income ratio was 23.62%.

Last year, the Group’s net fee and commission income rose 13.9% year on year to HK$11.27 billion. Securities brokerage, insurance and fund distribution and management commission income rose 45.2%, 95.6%, 43% and 252.4% year on year, respectively; trust and custodial services income fell 0.8% year on year. Payment services commission income grew 4.2% year on year, while income from trading foreign currencies fell 6.9% year on year. Bill commission income inched up 1.8% year on year.

Non-performing loan ratio up 9 basis points from end of last year

On loan quality, in the first half of the year, Bank of China (Hong Kong) recorded net provisions for impairment allowances on loans and other accounts of HK$8.248 billion, up 66.8% year on year; the non-performing loan ratio was 1.14%, up 9 basis points from the end of last year. The balance of non-performing loans was HK$19.558 billion.

Net provisions for impairment allowances increased by 63% year on year to HK$8.294 billion. The ratio of total loan impairment allowances to customer loans was 1.09%, up 0.2 percentage points year on year. Bank of China (Hong Kong) said that net provisions for Stage 2 impairment allowances were HK$3.517 billion, up 3.67 times year on year. This was mainly because the commercial real estate market remained weak; internal credit ratings of some real estate industry customers declined; and at the same time, a stress approach was adopted for certain high-risk real estate customers to increase provisions. Net provisions for Stage 3 impairment allowances were HK$3.838 billion, up HK$0.908 billion year on year, mainly due to last year’s certain existing non-performing customers; the valuation of their collateral decreased or provisions were increased due to debt restructuring.

Deputy Chairman of the Board and CEO Sun Yu, said that as of end-2025, the Group’s total assets were RMB 4,489.809 billion, up 7% year on year. Total customer deposits rose 7.9% year on year to RMB 2,940.463 billion. Total customer loans increased 2.3% year on year to RMB 1,715.787 billion. Last year, the average return on average shareholders’ equity and the average return on average total assets were 11.51% and 0.95%, respectively. The ratio of impaired loans was 1.14%, outperforming the market average.

The Group’s total capital ratio was 25.98% last year; the tier 1 capital ratio and the common equity tier 1 capital ratio were both 24.01%.

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