Hang Seng Bank set to report 16.5 per cent increase in net profit on Tuesday
BEA is expected to report an 82 per cent rise as it bounces back from 2016
A poll of analysts conducted by Thomson Reuters expects that Hang Seng Bank will report a net profit of HK$18.88 billion (US$2.41 billion) for 2017 as a whole, a 16.5 per cent increase compared with 2016.
CLSA analysts lead by Asheefa Sarangi wrote in a report that the increase in profit at Hang Seng Bank would be largely driven by improvements in its net interest income.
Sarangi has an underperform rating for the stock.
Large Hong Kong banks like Hang Seng Bank receive more cash in deposits than they are able to lend or invest, and so they benefit from a rising interest rate environment as they can gain greater returns on this unused cash. In addition, as rates rise, repayment rates on mortgages also grow.
Hong Kong’s base rate increased three times in 2017, which led to increased profits, but crucially for the banks, this was not fast enough to cause significant difficulties for borrowers and their ability to repay.
