BOC Hong Kong (Holdings) (2388.HK): 3Q26 Preview: Stable earnings despite softer fees

BOCHK is expected to report 3Q26 earnings in late October. We forecast net profit of HK$11.5bn, +28% yoy/+1% qoq, with PPOP +18% yoy/-1% qoq. We expect NII to rise 3% qoq to HK$14.5bn, supported by solid loan growth (+2.5% qoq), while underlying NIM remains broadly stable at 1.37%. While 1M HIBOR increased c.18bps qoq, providing some support to asset yields, we expect this to be largely offset by higher funding costs amid increased deposit competition. We forecast net fee income to decline 5% qoq to HK$2.8bn, reflecting softer wealth fee, partly offset by a recovery in insurance, while other traditional fee businesses remain relatively stable. Other non-NII expected to decline 11% qoq, reflecting weaker swap income as stronger loan growth reduces excess liquidity available for swap activities, alongside potential mark-to-market pressure from higher rates on the FVTPL trading and insurance books. On asset quality, we expect trends to remain broadly stable and continue to forecast 2H26 c