Glonghui, August 1 | Bank of America Securities released a report showing that Hang Seng Bank's net profit for the first half of the year rose 0.7% year-on-year to HK$9.6 billion, 0.6% higher than the bank's expectations and 6.7% higher than market expectations. Core profit increased by 1% year-on-year to HK$12.9 billion, 3.7% lower than the bank's forecast. The non-performing loan ratio surged to 5.32% from 2.83% in the second half of last year, the highest level in history. The common equity Tier 1 capital ratio (CET1) fell 1.6 percentage points to 16.6% from the end of last year, weakening the sustainability of share repurchase plans. The Bank of America indicated that it lowered its 2024-2025 profit forecast by 12 to 16% due to anticipated interest rate cuts and increased provisions from the Federal Reserve. The target price was reduced by 11% from HK$103.5 to HK$91.6. Considering the risk of commercial real estate loans in Hong Kong and the low coverage rate of non-performing loans, the rating was downgraded from “buy” to “outperform the market” in one fell swoop. The bank believes that Hang Seng Hong Kong's 9.6% non-performing loan ratio reflects the bank's careful classification, but it is worried that if the Federal Reserve cuts interest rates more slowly than expected, or if the Hong Kong economy weakens further, its credit costs may rise.