BOC Hong Kong’s Q1 Largely in Line; Lower NIM Offset by Stronger Fee Income

BOC Hong Kong, or BOCHK’s, brief first quarter update was largely in line with our expectations. Operating profit before impairment allowance of HKD 9.6 billion in the first quarter should see the bank meet our previous full year forecast of HKD 52.9 billion. However, the mix of the income did vary from our expectation. The positive was the strong increase in net fee and commission income of 30% against the same period last year to HKD 3.7 billion. This was mainly driven by the strong market sentiment during the quarter, which underpinned higher-than-expected growth in commission income from securities brokerage, funds distribution and insurance. We have increased our fee income growth assumption for 2021, given the strong performance in the first quarter.