[ET Net News Agency, 28 April 2020] UBS Global Research lowered its target price for
Hang Seng Bank (HSB)(00011) to HK$109 from HK$155 and downgraded its rating to "sell" from
"neutral".
With HIBOR projected to fall below 1%, the research house expects HSB's NIM (net
interest margin) to drop by 37bp by 2H 2021 versus the level seen in 2H 2019.
UBS expects ROA (return on assets) to decline by around 37bp in the medium term to
1.17%, and FCF (free cash flow) to fall short of 2019 dividends until 2026. It also
embedded an additional 1.5% loan-loss overlay on top of its forecasts to reflect market
concerns on asset quality. (KL)