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Hang Seng Bank Ltd 00011

Morningstar Rating
HKD 85.65 +0.10 (0.12%)
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Company Report

Hang Seng Bank Earnings: Better NIM Offset by Slower Loans Growth; Shares Still Attractive

Hang Seng Bank's 2023 results reflected stronger net interest margin, or NIM, than expected. We think this helped propel its share price up more than 9% on the afternoon of the results release. We now factor in a more resilient NIM in 2024 partly offset by higher credit cost and slower loans growth. But we also anticipate a pick-up in mainland China and Hong Kong economic activity from 2025 coupled with falls in the US interest rates that should allow loans growth to recover and help offset declining NIM. These assumptions lead to a 4.6% rise in our 2024 net profit forecast and minimal changes in later years. We expect return on equity to hover around 12%-13% over the next five years. Our fair value estimate remains at HKD 110, which prices Hang Seng Bank at 1.3 times 2024 price/book. We think this is fair, given average ROE of 12.6% for 2024-28. We remain buyers of Hang Seng Bank at its current price level. 2023 dividend per share of HKD 6.50 is yielding an attractive 7.3% at the HKD 89.30 share price.

Price vs Fair Value

00011 is trading within a range we consider fairly valued.
Price
HKD 86.30
Fair Value
HKD 162.00
Uncertainty
Medium
1-Star Price
HKD 763.60
5-Star Price
HKD 42.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Hang Seng Bank's low funding cost is supported by a large deposit base, which makes up the majority of its total funding base.

Bears

Limited growth opportunity in Hong Kong has tempted Hang Seng Bank into less familiar and potentially riskier offshore markets and in mainland China.

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News

Trading Information

Previous Close Price
HKD 85.55
Day Range
HKD 85.2086.80
52-Week Range
HKD 78.05120.20
Bid/Ask
HKD 85.65 / HKD 85.70
Market Cap
HKD 163.75 Bil
Volume/Avg
1.8 Mil / 2.0 Mil

Key Statistics

Price/Earnings (Normalized)
9.55
Price/Sales
3.98
Dividend Yield (Trailing)
7.59%
Dividend Yield (Forward)
7.59%
Total Yield
7.59%

Company Profile

Hang Seng Bank is a Hong Kong-based financial institution. Founded in 1933, the bank has a long history in Hong Kong and operates three main segments, retail banking and wealth management, commercial banking, and global banking and markets. The majority of the group's profit is generated in Hong Kong and mainland China. HSBC has been its majority shareholder since 1965, with a controlling 62% stake.
Sector
Financial Services
Industry
Banks - Regional
Stock Style Box
Large Value
Total Number of Employees
6,932

Competitors

Valuation

Metric
00011
O39
HSBC
Price/Earnings (Normalized)
9.559.0810.52
Price/Book Value
0.971.170.90
Price/Sales
3.984.612.45
Price/Cash Flow
8.387.84
Price/Earnings
00011
O39
HSBC

Financial Strength

Metric
00011
O39
HSBC
Quick Ratio
Current Ratio
Interest Coverage
Quick Ratio
No chart available

Profitability

Metric
00011
O39
HSBC
Return on Assets (Normalized)
1.02%1.29%0.79%
Return on Equity (Normalized)
10.89%14.12%13.76%
Return on Invested Capital (Normalized)
Return on Assets
00011
O39
HSBC
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Banks - Regional Industry Comparables

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Name
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
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PNC
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ITUB
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TFC
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MFG
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LYG
Lloyds Banking Group PLC ADRVjqdqkwrxCgsfv$41.6 Bil
DB
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NWG
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