• Business Summary

• Hang Seng Bank (11.HK) is a Hong Kong-based banking coorperation, principally engaged in the provision of banking and financial services.

• It operates through four segments. 1 = Retail Banking and Wealth Management segment is engaged in the provision of products and services related to personal banking; 2 = consumer lending and wealth management. Personal banking products and services include current and savings accounts, mortgages and personal loans, credit cards and insurance; 3 = Commercial Banking segment is engaged in the provision of products and services related to corporate lending, trade and receivable financing, payments and cash management, treasury and foreign exchange, insurance and investment, as well as corporate wealth management; 4 = Global Banking and Markets segment is engaged in the provision of financial solutions. Other Businesses segment is engaged in the management of shareholders’ funds and the investment in premises, properties and securities.

• “Buy” rating with target price = $160.

• Hang Seng Bank is best positioned among peers to benefit from Fed rate hikes, mainly attributed to its relatively high proportion of CASA deposits (estimated accounting for 77% of total deposits), and low exposure to RMB businesses.

• Investors should take into account that, if there is any faster-than-expected rate hikes should lead to more upside earnings revisions.

• Investors should also take into account that, Hang Seng Bank has nearly 80% of its loans concentrated in Hong Kong's local market – market analysts believe that, 11.HK is the highest among peers.

• With low China asset exposures, in my opinion, Hang Seng Bank is the best pure local-play Hong Kong bank.

• According to Thomson Reuters survey, there is ONE analyst rated “BUY”; TWO analysts rated “OUTPERFORM”; SIX analysts rated “HOLD”; FOUR analysts rated “UNDERPERFORM.”

• We expect Hang Seng Bank (11.HK)'s ROE to reach 14% in 2018, from currernt level of 11.5% – which will be above peers.

• We also expect 4 – 5% dividend yield.

• We recommend to buy 11.HK, target price = $160; cut-loss price = $144.5 (current 50-day moving average).

I, Michael Fung, am a licensed person under the Securities and Futures Commission. Until the date this commentary was published, neither I and/or my affiliates are the beneficiary of the securities mentioned herein or are entitled to any financial interests in relation thereto.

本人馮兆山為證監會持牌人士。截至本評論文章發表日止，本人及/或其有聯繫者並無持有全部提及之證券的所有相關財務權益.