[ET Net News Agency, 18 February 2020] Morgan Stanley said Hang Seng Bank's
(HSB)(00011) 2H 2019 post-tax profits of HK$11bn was 2% lower than the research house's
estimates.
Asset growth was stable HoH (loans up 3% HoH and deposits up 1%). NIM declined by 2 bps
HoH (exactly in line with Morgan's estimate). Fees was down 4% YoY (in line). This drove
core PPoP growth of 2% YoY and down 3% HoH.
Credit cost was 28 bps (annualised) in 2H 2019, driven by a slowing economy and hence
higher Expected Credit Loss (ECL) charge given economic uncertainty. CET1 ratio was strong
at 16.9% and the final dividend was HK$4, in line with Morgan's estimate.
Morgan maintained its "underweight" rating and HK$140 target price on HSB as it expects
profitability to stay under pressure in 2020/2021. (KL)
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{I-bank focus}Hang Seng Bank's profitability under pressure
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