Goldman Sachs published a research report that lowered the earnings per share forecast of banks in Hong Kong from 2012 to 2013 by 23% to 40%, and the target price cut by 21% to 38%. The bank chose Bank Hong Kong (02388-HK) first, and is optimistic about its capital, financing capacity, RMB business and risk management; it also added Bank of East Asia (00023-HK) to the “Confident Selling” list. The bank pointed out that the profitability of banks in Hong Kong is more cyclically affected than that of their peers in the Asia-Pacific region. It is mainly related to mainland business, low levels of return on assets and loan impairment reserves before provision, and sensitivity to the Hong Kong office market. The bank lowered the Hong Kong Bank's profit assessment to reflect: loan growth has slowed as banks have reduced risk appetite (especially trade finance and mainland loans); net interest spreads have continued to narrow due to rising financing costs and more stringent capital supervision requirements; credit costs have risen; and office prices are expected to drop by 20% in the next 12 to 18 months. Bank/original rating/new rating/original target price/new target price Bank of East Asia (00023-HK) /neutral/sell/35 yuan/24 yuan/ - 31.4% Dah Sing Bank (02356-HK) /neutral/sell/10.4 yuan/6.5 yuan/ -37.5% Yongheng Bank (00302-HK) /neutral/sell/88/59 yuan/ -33% Chong Hing Bank (01111-HK) /sell/13.4 yuan/9.3 yuan/ -30.8236% 8-HK) /Buy/Neutral/ 27.5 yuan/20.8 yuan/ -24.4% Hang Seng Bank (00011-HK) /neutral/neutral/135 yuan/107 yuan/ -20.7% Daxin Finance (00440-HK) /neutral/38 yuan/25 yuan/ -34.2%