BOC Hong Kong, Like Peers, Should See Stable Loans Growth but Declining Interest Margin

Bank of China Hong Kong's strong financial fundamentals and close connection with its parent, Bank of China, position it well, in our view, to benefit from rising economic integration between Hong Kong and the Greater Bay Area on both sides of the Pearl River. It has a long history operating in Hong Kong, where it has the second-largest market share of deposits after HSBC, and is competitive in offering cross-border banking services to its retail and wholesale clients. Its funding advantage from a large base of sticky deposits is complemented by tight cost control discipline, which has resulted in an industry-leading cost/income ratio of around 30%.