Hang Seng Bank’s First-Half 2021 Results In Line on Lower Credit Costs

Hang Seng Bank’s first-half results were within our expectations. Profit before tax of HKD 10.3 billion was down 3% year on year, but represented a 17% increase on a half-on-half basis. The bank’s profit benefited from lower expected credit loss charge of HKD 339 million, down from HKD 1.76 billion and HKD 978 million in the first and second half of fiscal 2020, respectively. Net interest income was down 19.7% year on year, due to an expected decline in net interest margin on a year-on-year basis. The decline was offset by a 16.8% year-on-year increase in net fee income, ahead of our previous estimates. As expected, net fee income growth was led by investment and credit card related fee income, which collectively increased 22.1% year on year. The bank declared a second-quarter dividend of HKD 1.10 per share, in line with the first-quarter dividend and our revised forecast in late July.