Citi Research forecasted in a report that BOC Hong Kong would report a 1Q24 operating profit of $11.6 billion, up 33% QoQ and 5% YoY. With 1-month HIBOR falling 55 bps QoQ, net interest margins are expected to fall QoQ, but the pressure is manageable. Looking ahead, deposit costs should continue to improve as the large Hong Kong banks continue to lower their time deposit rates. With most time deposits having a maturity of three to six months, banks' funding costs are expected to improve in 2Q.Citi also expected credit costs to improve QoQ but remain high at 25 bps, compared to 27 bps in FY24, and forecasted BOCHK's pre-provision operating profit to be in the range of 2-6% from FY24 to FY26. The broker believed BOCHK would need a more aggressive programme to drive further revaluation as its domestic peers increase their return on capital.Related NewsJefferies Raises HANG SENG BANK (00011.HK) TP to $100, Rating HoldThe broker broadly maintained its FY24 EPS forecast for BOCHK, but raised its FY25 forecast by 2% to reflect higher forward exchange rates and better-than-expected costs in 4QFY23, partially offset by higher credit costs.Citi slightly lowered BOCHK's target price to $25 from $25.1, with a Buy rating.