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BOCHK posts higher profit as lower credit costs offset margin pressure

Bank of China (Hong Kong), one of the city’s three note-issuing banks, reported a 7.1 per cent year-on-year increase in first-half net profit, as lower impairment charges and a wider net interest margin helped offset continued pressure on lending margins from falling Hong Kong interbank rates. Profit attributable to shareholders came to HK$23.74 billion (US$3 billion) for the six months to June 30, or HK$2.2453 per share, according to a stock exchange filing on Friday. The result beat analysts’...

Source: South China Morning Post · August 28, 2026 at 11:01 AM · AI-assisted report

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BOCHK posts higher profit as lower credit costs offset margin pressure
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KUALA LUMPUR, HONG KONG, 28 AUGUST 2026 —

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BOCHK posts higher profit as lower credit costs offset margin pressure

Market Impact

KUALA LUMPUR, Aug 28 (Reuters) – Bank of China (Hong Kong) Ltd. (BOCHK), one of Hong Kong’s three note-issuing banks, reported a 7.1% year-on-year increase in first-half net profit, as lower impairment charges and a wider net interest margin helped offset continued pressure on lending margins from falling Hong Kong interbank rates.

Profit attributable to shareholders rose to HK$23.74 billion (US$3 billion) for the six months to June 30, or HK$2.2453 per share, according to a stock exchange filing on Friday. The result exceeded analysts’ average estimate of HK$22.94 billion.

BOCHK’s net interest margin, including income from foreign exchange swap contracts, stood at 1.57%, up from 1.54% a year earlier. Credit costs also eased, with the net charge of impairment allowances falling 26.9% to HK$2.38 billion from about HK$3.26 billion in the same period last year. The impaired loan rate declined to 0.89% from 1.02% at the end of June 2025.

Hong Kong lenders have faced challenges as monetary policy shifts away from elevated interest rates, which had previously supported margins. Commercial real estate exposures in Hong Kong and mainland China remain a key risk area requiring close monitoring.

To counter margin pressure, lenders have reduced cost-to-income ratios and expanded fee-based business, according to a KPMG review of Hong Kong’s banking sector published in June. Despite this, credit quality across the sector has remained broadly stable.

Net fee and commission income fell 5.8% to HK$5.98 billion, primarily due to declines in commission income from insurance and trust and custody services, which dropped 40.5% and 22%, respectively. However, this was partly offset by stronger wealth management activity, with commission income from funds distribution and funds management rising 55.1% and 78.2%, respectively. Credit card commission income increased 12.2% amid a recovery in local retail spending.

BOCHK’s insurance business also saw stronger sales, with the value of standard new premiums increasing 27.9% year-on-year to HK$18.96 billion, while its contractual service margin rose 23.6% from the end of 2025.

The bank declared an interim dividend of HK$0.8188 per share, up from HK$0.58 in the first half of 2025. It also approved a three-year shareholder return programme for 2026 to 2028, including plans to distribute additional shareholder returns of no less than HK$10.5 billion over the period.

The results follow BOCHK’s completion of its five-year strategic plan, with return on average shareholders’ equity reaching 13.18% in the first half of 2026, compared with 12.86% a year earlier. BOCHK’s shares closed up 2.27% at HK$50.97 on Friday before the announcement, while the benchmark Hang Seng Index was flat.

Malaysia market impact Details not yet available.

Sector/company specifics BOCHK’s performance reflects broader trends in Hong Kong’s banking sector, where lenders are adapting to a lower-for-longer interest rate environment while managing risks in commercial real estate. The bank’s focus on fee-based income and cost efficiency aligns with industry-wide strategies to sustain profitability amid margin pressures.

Outlook The outlook for BOCHK and Hong Kong’s banking sector remains contingent on interest rate movements and the performance of commercial real estate in Hong Kong and mainland China. Analysts will closely monitor the bank’s ability to maintain its net interest margin and manage credit risks as monetary policy continues to evolve.

Related: Bank of China (Hong Kong) Ltd. (BOCHK)

Reporting based on South China Morning Post. Figures and claims are subject to revision as the story develops. DomainFork publishes editorial context, not investment advice — see our editorial standards.