[News Alert] Hang Seng Bank (11 HK, BUY) FY21 result missed consensus by 20% on higher provisioning and weaker revenue growth, -ve to share price
- HSB (11 HK, BUY) FY21 result posted at HK$14bn, down 16.3% y-o-y, and missing ours/consensus forecast by 25%/20%, respectively. This implies its 2H21 earnings landed only at HK$5.2bn, or down 32%/41% y-o-y/h-o-h.
- The disappointing result was mainly attributed by a) higher than expected provisioning (ECL charges) on its China’s real estate credit exposure, b) weaker net interest/non-interest income growth as impacted by consistently low interest rate/poor market sentiment in 2H, and c) continuous higher digital infrastructure investment leading to higher operating expenses.
- NIM further declined to 1.49% (-2bps h-o-h) while NPL ratio and credit cost moderately increased to 1.04% (+35bps h-o-h) and 0.49% (+42bp h-o-h).
- With the expectation of US interest rate hike, management indicated every 25bps parallel shift in interest rate (accounting for full year) will lead to a 10bps NIM expansion. As current interest rate is at low ground, NM is expected to benefit more from the widening of deposit spread at the initial stage of rate hike. However, management also indicated given the abundant liquidity in HK, it only expect the pass-through from higher US interest rate to be felt in 2H22F.
- We expect market to revise down HSB FY22/23F earnings on the back of the disappointing FY21 result, hence, -ve to HSB near-term share price.
- We are reviewing our model forecast.
HSB FY21 result summary