- JPM reported that Hong Kong banks' 1H26 results beat expectations, with covered banks recording an average profit growth of 33% YoY, primarily driven by non-interest income and resilient pre-provision operating profit.
- Despite QoQ net interest margin contraction from lower Hong Kong Interbank Offered Rates, balance sheet expansion is expected to support single-digit net interest income growth over the next 12-18 months.
- The broker maintains an Overweight stance on the sector with room for EPS forecast upgrades, ranking large banks as STANCHART, HSBC HOLDINGS, and BOC HONG KONG respectively.
