The Zhitong Finance App learned that Goldman Sachs released a research report reaffirming Hang Seng Bank's (00011) target price of HK$170, maintaining a “buy” rating.

According to the report, Hang Seng Bank (00011)'s earnings per share for the second half of 2020 were lower than Goldman Sachs expectations of 7%, mainly due to lower net interest spreads and revenue than expected, as well as rising costs. The credit quality was in line with expectations, the capital position was slightly better than expected, and dividends were in line with expectations.

Goldman Sachs said that although the net interest spread was lower than expected, it is encouraging that the net interest spread for the fourth quarter has been stable on a quarterly basis. In addition, Hang Seng management's comments on the first quarter of 2021 to date show that despite a further slight decline in the Hong Kong interbank interest rate, Hang Seng's net interest spread remained at about 1.5%. Goldman Sachs raised the net interest spread estimate by 3-4 basis points and increased the net interest income estimate by 7%. It is now expected that net interest income in 2021 will fall 7% and rise by 6% and 9% in 22 and 23.