The article "After the Performance" summarizes the latest ratings, target prices, and views from major banks following HSBC's earnings announcement

HSBC Holdings (00005.HK) announced its performance for last year, and after the stock price rose over 5% yesterday (25th), it further increased by 2.2% in the morning session to report HKD 154.8. JP Morgan indicated that HSBC's fourth-quarter performance and the guidance for tangible equity return (an average of 17% or above over the next three years) exceeded expectations. The overall impact of the earnings report is net positive, with management providing greater clarity on revenue growth, net interest growth momentum, and the roadmap for achieving synergies with Hang Seng Bank from this year to 2028. Management's comments on costs also help alleviate concerns about underinvestment in key areas such as technology and artificial intelligence. Overall, the stock price is expected to maintain strong momentum, with the investor day in May serving as the next price catalyst. Huatai Securities raised HSBC's target price from HKD 143.08 to HKD 166.07, predicting a price-to-book ratio of 1.75 times for this year, maintaining a "Buy" rating based on the company's strategic positioning, structural adjustments, and resonance with the local capital market.

HSBC announced its performance for last year yesterday afternoon (25th), reporting a pre-tax profit of USD 29.907 billion, a year-on-year decrease of 7%, close to the upper limit of the forecast from eight brokerages at USD 30.135 billion. Basic earnings per share were USD 1.21. The quarterly dividend was 45 cents per share, with an annual payout of 75 cents, exceeding the upper limit of the forecast from eight brokerages at 74 cents. The reported revenue increased by 4% year-on-year to USD 68.274 billion. Net interest income increased by USD 2.1 billion, reflecting structural hedging reinvested at higher yields, growth in deposit balances, and increased net interest income from capital market treasury operations. The sale of businesses in Argentina and Canada resulted in a USD 1.6 billion year-on-year adverse impact, and the pressure on deposit yields offset some of the increase. The net interest margin rose by 3 basis points to 1.59%. The expected credit losses for the year are USD 3.9 billion, an increase of USD 400 million year-on-year, including related provisions for the commercial real estate sector in Hong Kong and mainland China.

【Guidance for tangible equity return over the next three years exceeds expectations】

Citi stated that HSBC's actual pre-tax profit excluding items of concern in the fourth quarter was 9% higher than expected, with revenue exceeding expectations by 3%, and cost expenditures in line with expectations, while provisions were 12% lower than expected. The revenue beat expectations was driven by a 6% increase in net interest income, while non-net interest income was 1% lower than expected, which was generally in line with expectations. The reported pre-tax profit was also 18% higher than expected, driven by lower-than-previously-guided losses from the sale of the French mortgage portfolio. The common equity tier 1 capital ratio increased by 40 basis points quarter-on-quarter to 14.9%, exceeding expectations by 20 basis points, even though the final dividend per share was 7% higher than expected, and the ratio was reduced to 13.8% under the privatization of Hang Seng Bank. HSBC has strengthened its business targets, with a tangible equity return expected to be 17% or above from this year to 2028, compared to consensus forecasts of 16.6% to 17%, indicating overall strong performance. The bank also noted that HSBC's guidance on net interest income and costs implies that market consensus earnings per share forecasts could be raised by over 6%, and the synergies with Hang Seng Bank could bring an additional 1% to 2% earnings per share growth, foreseeing potential for high single-digit upward adjustments in market earnings forecasts The bank has given HSBC a "Buy" rating and a target price of HKD 143.3.

JP Morgan stated that HSBC's revenue growth of 5% in 2028 is gradual and structural, providing better clarity for revenue growth in the next two years. The bank's net interest income guidance of USD 45 billion exceeds market expectations, with management clarifying that it is primarily driven by deposit growth and has considered interest rate cut expectations and credible downside risks, which will provide greater confidence to investors. The bank also noted that management's comments alleviated concerns about insufficient investment in artificial intelligence, believing that HSBC can maintain a balance between simplifying its corporate structure and business lines and investing in talent and technology for future growth while maintaining cost discipline. The bank expects there to be upside potential for return on equity, especially as HSBC may resume buybacks a quarter earlier than guided. There is also potential for the scale of buybacks, with market consensus expecting buyback scales of approximately USD 5 billion and USD 11 billion in the next two years, respectively. The bank also believes that the most severe period for commercial real estate in Hong Kong has passed, and additional provisioning pressure should ease. The guidance for credit costs of 40 basis points this year may also have room for downward adjustment. The bank has set a target price of HKD 165 for HSBC and a "Overweight" rating.

【Net interest income guidance reflects better visibility of HIBOR】

Morgan Stanley believes that HSBC's stronger guidance reflects management's confidence in better visibility of Hong Kong interbank offered rates and strong deposit performance in the balance sheet. The bank sees a forecast of net interest income of USD 45 billion in 2026, and a revenue growth guidance of 5% in 2028, while reflecting better wholesale banking numbers than the bank's expectations. Overall, the bank has raised its earnings forecast for HSBC for the next two years by 12% and 11%, with major changes including a better outlook for bank net interest income and higher revenue driven by better trading bank earnings. The bank has also raised its credit expenditure forecast, mainly reflecting a larger estimated loan balance. The bank has raised its target price for HSBC by 8%, from HKD 138.1 to HKD 149, based on a high double-digit tangible return on equity and capital returns, maintaining an "Overweight" rating for HSBC.

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The latest comprehensive ratings and target prices for HSBC from 7 brokerages show that 2 brokerages have raised their target prices, while 5 have given "Buy," "Overweight," or "Outperform" ratings.

Brokerage│Investment Rating│Target Price

Huatai Securities│Buy│HKD 143.08->HKD 166.07

JP Morgan│Overweight│HKD 165

BNP Paribas│Outperform│HKD 150 (1,415 pence)

Morgan Stanley│Overweight│HKD 138.1->HKD 149

Citi│Buy│HKD 143.3

UBS│Neutral│HKD 140.6

Jefferies│Hold│HKD 118.8 (1,120 pence)

Brokerage│Viewpoint

Huatai Securities│Narrowing interest margins and excellent wealth management driving profit improvement

JP Morgan│Quarterly earnings report highlights are positive, continuing strong momentum in stock prices

BNP Paribas│Strong earnings update, management's tone is confident Morgan Stanley │ Quarterly operating profit before provisions exceeded expectations by 10%, with a target return on tangible equity of 17% or more over the next three years.

Citigroup │ Adjusted pre-tax profit exceeded expectations, with additional Hang Seng synergies and strengthened targets for 2026-2028 driving healthy forecast upgrades.

UBS │ Quarterly results exceeded expectations, with a 6% upward revision in pre-provision operating profit forecasts for 2026, targeting over 17% return on tangible equity.

Jefferies │ Strong quarterly net interest and wealth income, with full-year guidance implying consensus forecast upgrades in the high single digits