The Company’s 1Q22 operating profit before impairment allowances increased by 7.2% YoY to HK$10,349 mn. Net interest income amounted to HK$8,537 mn, up 4.1% YoY. Net fee and commission income was HK$2,917 mn, down 22.0% YoY. Operating expenses increased by 2.9% YoY, and net charge of impairment allowances increased largely by 185.5% to HK$923 mn.
　　The strategic goal to "build a first-class regional banking group" was further promoted. 1) The Company's position as one of the leading banks in Hong Kong was further consolidated; 2) the Company's cross-border finance business was further promoted, and cross-border financial cooperation in the Greater Bay Area was further deepened; and 3) the Company's Southeast Asia business continued to develop and regional synergies were further enhanced.
　　In the rest of 2022, we expect that the Hong Kong economy will recover and record moderate growth; we project that the Company's NIM will benefit from the US Fed's interest rate hike; and we expect the Company's earnings will continue to recover and record relatively good growth. We forecast the Company's EPS for FY22/ FY23/ FY24 to be HK$2.406/ HK$2.772/ HK$3.195, up 10.7% YoY/ 15.2% YoY/ 15.3% YoY, respectively. We have revised up our target price for the Company to HK$39.78, equivalent to 16.5x FY22 PER, 14.4x FY23 PER, 1.3x FY22 PBR and 1.2x FY23 PBR. Meanwhile, we upgrade our rating to "Buy" for the Company.