BOC Hong Kong Earnings: Strong Cost Efficiency Boosts First-Half Result; Asset Quality Resilient

We maintain our fair value estimate for Bank of China Hong Kong, or BOCHK, at HKD 33 per share, which is 1.05 times book value and nearly 40% above the current price, following the release of its interim results. In the first half of the year, BOCHK's annualized return on equity was 12.4%, the highest six-month ROE since before the pandemic. This performance exceeds our estimate of BOCHK's cost of equity but remains below the average ROE of 13.5% seen in the 2010s.