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Investing.com - UBS downgraded Hang Seng Bank (HK:0011) (OTC:HSNGY) from Neutral to Sell on Thursday, while reducing its price target to HK$102.00 from HK$112.00, citing mounting provision pressure due to the bank’s Hong Kong commercial real estate exposure.
The downgrade follows Hang Seng Bank’s reported 34.6% year-over-year net profit decline for the first half of 2025, which fell short of both UBS and market expectations after record-high credit costs impacted results.
UBS cut its 2025-2026 earnings per share forecasts by 12-18% for Hang Seng Bank, anticipating high expected credit loss charges to continue through the remainder of 2025.
During its earnings call, Hang Seng Bank management guided for similar expected credit loss charges in the second half of 2025 as seen in the first half, implying 2025 credit costs would exceed 100 basis points.
UBS also expressed doubt about Hang Seng Bank’s ability to maintain stable dividend per share in 2025, despite the potential for the bank to increase its payout ratio above 90%.
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