DBS analyst Manyi Lu reiterated a Buy rating on Bank of China (BACHF – Research Report) today and set a price target of HK$5.00.
Manyi Lu’s rating is based on a combination of factors that highlight the Bank of China’s resilience and growth potential. Despite a slight decline in net profit and net interest income in the first quarter of 2025, the bank’s fee income showed a positive trend, particularly driven by its overseas operations. This growth in fee income is notable as it outpaces that of its state-owned enterprise peers, suggesting a strong performance in international markets.
Furthermore, Manyi Lu projects a steady earnings growth rate from 2024 to 2027, supported by stable loan volume growth and consistent non-performing loan ratios. The bank’s limited exposure to US-linked clearing and settlement fees, along with a manageable level of geopolitical risk, adds to its appeal. The target price for the stock has been revised upwards, reflecting a lower cost of equity and a robust dividend yield, which further supports the Buy recommendation.