Skip to Content

BOC Hong Kong Holdings Ltd 02388

Rating as of

Morningstar’s Analysis

Currency in HKD
Is it the right time to buy or sell?
Find out with Morningstar Premium
Is it the right time to buy or sell?
Find out with Morningstar Premium

1-Star Price


5-Star Price


Economic Moat


Capital Allocation


BOC Hong Kong Undervalued on Better Outlook for NIM in Medium Term

Michael Wu, CAIA Senior Equity Analyst

Analyst Note

| Michael Wu, CAIA |

Ahead of the first-half results, we raise our fair value estimate for narrow-moat-rated BOC Hong Kong to HKD 36 per share from HKD 34. While there is no change in our view that net interest margin will decline on a full-year basis in 2021, we lift our medium-term net interest margin assumption to factor in market expectations of rising interest rates at the end of 2022. This should start flowing through to net interest margin in 2023. The magnitude of the increase is dependent on the level of system liquidity, competition on deposits, and also pricing on the asset side. Our 2021 dividend forecast of HKD 1.26 per share is reaffirmed, which represents a dividend yield of 4.9% at the current share price of HKD 25.75. Our dividend forecast assumes a payout ratio of 50%, at the midpoint of the bank’s guidance of 40%-60%. With a strong capital position and more certainty on the current COVID-19 situation, there may be some upside in the bank opting for a higher dividend payout as earnings are expected to be flat in 2021.

Read Full Analysis

Company Profile

Business Description

Bank of China Hong Kong is a subsidiary of Bank of China. It is the second largest bank in Hong Kong in terms of loan and deposit market shares. BOCHK is legally separate from Bank of China but maintains close relationships in management, administration, and business relations. They also co-operate in several areas including products, such as the reselling of Bank of China's insurance and securities services. Bank of China holds a 66% stake in Bank of China Hong Kong.

1 Garden Road, 53rd Floor, Bank of China Tower
Hong Kong, Hong Kong
T +852 28266314
Sector Financial Services
Industry Banks - Regional
Most Recent Earnings
Fiscal Year End Dec 31, 2021
Stock Type
Employees 14,915

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.