The market estimates that the US Federal Reserve will enter a cycle of interest rate cuts in the second half of the year, and DBS believes that net interest spreads in the second half of the year will face greater pressure to narrow.
The Zhitong Finance App learned that DBS released a research report stating that maintaining Hang Seng Bank's (00011) “holding” rating, the target price was lowered from HK$116 to HK$97, and the profit forecast for this year and next two years was lowered by 11% to 12% to reflect a more conservative view on expected credit losses.
According to the report, under the company's strategy of prudent balance sheet expansion, the company's loan balance fell by about 7% year on year at the end of last year, and the mainland's commercial real estate exposure decreased by 33% year on year. After the risk reduction process, the non-performing loan ratio fell 2 points to 2.83% compared to the first half of the year. Furthermore, credit costs are expected to fall in the future.
The bank pointed out that the market estimates that the US Federal Reserve will enter an interest rate reduction cycle in the second half of the year, and believes that net interest spreads in the second half of the year will face greater narrowing pressure. DBS has reduced concerns about Hang Seng's commercial real estate exposure and asset quality in the Mainland, but believes the mainland's macroeconomic uncertainty continues.