BOC Hong Kong's pre-provision operating profit up by 27% to HK$6.8b

The reported PPOP figure is 22% higher than operating expenses. 

BOCHK's net interest income expanded as NIM of Rmb business made gains and core NIM remained stable. Furthermore, there were small write-back in loan provisions. BOCHK was tagged the best performer among all HK/China banks. 

Here's more from Kim Eng Hong Kong:

1Q12 PPOP reached 30% of the old FY12 estimate. BOCHK 1Q12 pre- provision operating profit rose by 27% yoy, to HK$6.8b, as rose in revenue at 22% was much higher than that of operating expenses, up 10% yoy. Its 1Q12 PPOP reached 30% of our old FY12E estimate. On qoq basis, 1Q12 PPOP was up by 38% qoq, thanks to the 21% fall in opex.

NIM expanded yoy 

Comparing 1Q12 with 1Q11: one, net interest income rose, due to higher net interest margin; two, NIM expanded as NIM of Rmb business improved. NIM of core-business narrowed slightly; three, net fee income rose slightly because the loans, credit cards and trust & custody fee rose, while brokerage and insurance fee fell; four, there were some mark to market gain in investments; lastly, there were small write-back in loan provision, but lower than that in 1Q11.

Small write back in loans provisions during 1Q12

Comparing 1Q12 with 4Q11, the net interest income rose together with NIM; Rmb business NIM improved, while core NIM was stable; net fee income rose through loan commissions, insurance and fund distributions; there were small write- back in loan provisions, versus net charge in 4Q11.

Revised up earnings estimates 

Due to the promising 1Q12 figures, Kim Eng revises its earnings estimates which was already higher than market consensus slightly. Assuming 65% dividend payout ratio, BOCHK is still offering 5% FY12E dividend yield at current share price. The bank’s high CAR, the highest among local banks, would enable it to maintain its dividend payout policy.