BOC Earnings: Net Profit Stronger Than Expected on Lower Tax Rate; Tariff Hike Poses Risks

We maintain our fair value estimate of HKD 4 per share for Bank of China, or BOC. While 2024 revenue and earnings growth of 1.2% and 2.6%, respectively, pipped our projections of 0% and 1% growth, the better performance was primarily driven by larger-than-expected trading gains of 35% and decreasing tax rates. We see these as one-off factors. Following its share price gain of over 16% year to date, we believe BOC is relatively less attractive compared with its nationwide state-owned peers. From a valuation and outlook perspective, we prefer China Construction Bank. We expect BOC’s return on equity to decline to 8% by 2029 from 9.5% in 2024.