Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

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Equity Bottom-Up

While the overall economy remains challenging, the Hong Kong banking sector is holding up reasonably well despite slower growth. Year-to-date growth for loans for use in Hong Kong, excluding trade loans, is up 2.8% to May 2016, or 6.9% on an annualized basis. Liquidity in the system is still healthy, with the loan/deposit ratio at 78.5%.At the bank level, the increase in nonperforming loans for the Hong Kong banks is attributable to its China loan book. For the Bank of East Asia, we previously anticipated lower credit costs in fiscal 2016, as the bank has developed a better grip on its nonperforming loans in China. However, management noted that first-half credit costs are more aligned to the second half of fiscal 2015, at around HKD 1.3 billion. We increase our fiscal 2016 credit cost assumption to HKD 2.3 billion from HKD 1.8 billion and assume slightly higher credit costs over the next five years.Analysts: Michael Wu, CAIA &amp; Iris Tan, CFA

While the overall economy remains challenging, the Hong Kong banking sector is holding up reasonably well despite slower growth. Year-to-date growth for loans for use in Hong Kong, excluding trade loans, is up 2.8% to May 2016, or 6.9% on an annualized basis. Liquidity in the system is still healthy, with the loan/deposit ratio at 78.5%.At the bank level, the increase in nonperforming loans for the Hong Kong banks is attributable to its China loan book. For the Bank of East Asia, we previously anticipated lower credit costs in fiscal 2016, as the bank has developed a better grip on its nonperforming loans in China. However, management noted that first-half credit costs are more aligned to the second half of fiscal 2015, at around HKD 1.3 billion. We increase our fiscal 2016 credit cost assumption to HKD 2.3 billion from HKD 1.8 billion and assume slightly higher credit costs over the next five years.Analysts: Michael Wu, CAIA &amp; Iris Tan, CFA

Rising Credit Costs Expected for Bank of East Asia in Fiscal 2016