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<Research>HSBC Research Estimates BOC HONG KONG Exposure to CHINA VANKE at $10-14B w/ Base Scenario Downgraded to Stage 3 Loan Next Yr
Recommend 5 Positive 9 Negative 4 |
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BOC HONG KONG (02388.HK) may have significant exposure to CHINA VANKE (02202.HK), thereby facing higher credit costs, HSBC Global Research published a research report saying. Therefore, the broker kept rating at Buy for BOC HONG KONG, and dropped its target price from $45.2 to $43.2. As of 2Q25, BOC HONG KONG's commercial real estate loan balance in mainland China was $77.6 billion, with SOEs/ private enterprises accounting for 86%/ 14%, respectively, the report noted. Considering CHINA VANKE's large scale and BOC HONG KONG's tendency to lend to state-owned developers, it is estimated that BOC HONG KONG's exposure to CHINA VANKE could be between $10 billion and $14 billion, accounting for approx. 0.6-0.8% of its total loan balance. HSBC Global Research believed that the likelihood of BOC HONG KONG downgrading its CHINA VANKE exposure to Stage 3 before the end of 2025 is low, mainly because the domestic bond still has a 30-day grace period. The situation is rapidly evolving, hence multiple scenarios are outlined, with the base scenario being that CHINA VANKE's loans will be officially classified as Stage 3 in 2026, leading to a material increase in BOC HONG KONG's corresponding credit cost provisions. AASTOCKS Financial News Website: www.aastocks.com |
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