On July 26th, CLSA published a report indicating that Hong Kong-based banks rose 15% in the second quarter, outperforming the Hang Seng Index during the same period, supported by the easing of market concerns about asset quality and the improvement in capital return of individual banks. Recently, the market has once again focused on the performance of local commercial real estate and headwinds on short-term net interest margins, causing a pullback in bank stocks. The bank estimates that net interest margins will remain resilient in the second half of the year, and losses from commercial real estate loans will remain under control. Among bank stocks, the bank prefers HSBC, with a "buy" rating and a target price of HKD 74, achieving a tangible equity return of 14% to 15%, excluding Canada and Argentina, with the current price being twice the tangible asset ratio. In addition, it holds a positive view on Hang Seng Bank for a short period of 90 days, with a "neutral" rating and a downwardly revised target price of HKD 106 from HKD 109, expecting a new buyback plan to be announced in the second half of the year. Bank of East Asia's rating has been downgraded from "buy" to "neutral" with a downwardly revised target price of HKD 9.5 from HKD 10.6, due to slow progress in normalizing credit costs and limited room for increase in short-term capital returns.