Flexible 1H25 NIM performance, non-integrated

Equity Research[Table_Title]Company Report:BOC Hong Kong (02388 HK) 公司报告：中银香港(02388 HK) Strong Beat, Reiterate "Buy" Reiterate"Buy"withTP atHK$42.35.BOCHK's (the “Company”) 1H2025 net[Table_Rank]Rating: Company Reportinterest income met expectations, while non-interest income significantly beatour forecast.1H2025 pre-provision operating profit surged 16.5% YoY, driven byrobustfee income growth(+25.8%YoY)and disciplined cost control(CIR20.8%).Non-interest income momentum was fueled by recovering marketsentiment and heightened wealth management demand from GBA cross-borderactivities. We remain positive on wealth prospectsdue to deepening GBA 评级：买入(维持) Share price股价：HK$35.220 Equity Research ReportNIMresilience defies Hibor volatility,showcasing superior liabilitymanagement strength.Despite extreme Hibor fluctuations in 2Q2025, withrates plunging below 1% and pressuring the banking system, BOCHK deliveredexceptional NIM defense with only 2 bps QoQ compression to 1.53% (1Q2025:1.55%). The Company's funding cost management and liability optimizationproved highly effective. CASA deposits surged 11.5 percentage points from Asset quality strengthens, provision coverage ample, wealth management 报告year-end 2024, remaining well below HK peers' average.Bad debt chargesroseHK$1.2 billion YoY to HK$3.3 billion,butNPL coverage ratio stayed above 85%. 究Non-interest income delivered exceptional performance with net fee andcommission income surging 25.8% YoY to HK$6.29 billion, driven by recovering 券研market sentiment and strong client demand for investment and wealth solutions.Net trading income jumped 131.9% YoY to HK$12.23 billion, benefiting from 证increased global market trading activities. We expect sustained momentum incross-border synergies and overseas expansion to drive non-interest income growth, while superior asset quality underpins earnings resilience.Catalysts:1)Digital asset opportunities; 2)cross-boundary wealth management connect;and3)proactive policy may boosteconomy.Downside risks:1)real estate industry depressed;and2)weak credit demand in Hong Kong. CompanyRating Definition The Benchmark:Hong Kong Hang Seng Index (1)The Analysts and their associates do not serve as an officer of the issuer mentioned in this Research Report.(2)The Analysts and their associates do not have any financial interests in relation to the issuer mentioned in this Research Report.(3)Guotai Junan International Holdings Limited and/or its subsidiaries do nothold equal to or more than 1% of the market capitalization of theissuer mentioned in this Research Report. (4)Guotai Junan International Holdings Limited and/or its subsidiaries have not had investment banking relationships with the issuermentioned in thisResearch Report within the preceding 12 months.(5)Guotai Junan International Holdings Limited and/or its subsidiariesare making, or will make a market in the securities in respect of the (6)Guotai Junan International Holdings Limited and/or its subsidiarieshave not employed an individual serving as an officer of the issuermentioned in this Research Report. There is no officer of the issuer mentioned in this Research Report associated withGuotai JunanInternational Holdings Limited and/or its subsidiaries. DISCLAIMER This Research Report does not constitute an invitation or offer to acquire, purchase or subscribe for securities by GuotaiJunan Securities(Hong Kong) Limited("GuotaiJunan"). GuotaiJunan and its group companies may do business that relates to companies covered in researchreports, including investment banking, investment services, etc.(for example, the placing agent, lead manager, sponsor, underwriter or invest Any opinions expressed in this report may differ or be contrary to opinions or investment strategies expressed orally or in written form by salespersons, dealers and other professional executives of GuotaiJunan group of companies. Any opinions expressed in this report may differ or becontrary to opinions or investment decisions made by the asset management and investment banking groups of GuotaiJunan. Though best effort has been made to ensure the accuracy of the information and data contained in this Research Report, GuotaiJunan doesnot guarantee the accuracy and completeness of the information and data herein. This Research Report may contain some forward-lookingestimates and forecasts derived from the assumptions of the future political and economic conditions with inherently unpredictable andmutable situation, so uncertainty may contain. Investors should understand and comprehend the investment objectives and its related risks, This Research Report is not directed at, or intended for distribution to or use by, any person or entity who is a citizen orresident of or located inany jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation or which would subjectGuotaiJunan and its group companies to any registration or licens