Analysts lift BOCHK outlook
Analysts have upgraded the earnings outlook for BOC Hong Kong (Holdings) (BOCHK), a day after Beijing said it would pump US$22.5 billion into its parent, Bank of China (BOC).
Fellow Big Four state bank, China Construction Bank, also received the same amount.
Lehman Brothers yesterday raised BOCHK's projected earnings by 7 per cent to HK$9.8 billion for this year and by 8 per cent to $10.5 billion next year. The target price was lifted to $17.10.
'The capital injection should be more than enough to restructure the BOC group,' said Tracy Yu, a banking analyst at Lehman.
The capital injection aims to assist the banks in boosting their balance sheets for eventual listing and obtaining further capital.
The injection raised BOC's provision coverage ratio up to international standards and its tier-one ratio to about 13.5 per cent, up from the pre-bailout 7.8 per cent.
'The generous injection is positive for BOCHK as it will reduce share-placement overhang risk and a stronger parent will be in a better position to help BOCHK's business development in Hong Kong and China,' Ms Yu said.
She said BOC would no longer need to raise funds by placing BOCHK shares, as it did last month.
Yesterday, BOCHK's share price climbed 25 HK cents to a three-week high of $15.25. Its price has doubled in the past few months.
Ms Yu also raised the bank's loan-growth estimate to 8.5 per cent from 4 per cent in the next financial year on the back of a recent economic upturn, rapid monetary growth and bullish consumer sentiments.
