Barclays is optimistic about HSBC, expecting its profit performance to exceed market expectations

Barclays published a research report indicating that it expects HSBC Holdings (00005.HK) to significantly outperform its guidance and market expectations, primarily due to the continued favorable factors in the Hong Kong market, the comprehensive integration of Hang Seng Bank, and its strategic initiatives that can offset fluctuations in U.S. policies. Barclays assumes that U.S. interest rates will drop to around 3%, and it is expected that HSBC's net interest income in 2026 and 2027 will still be 4% to 5% higher than market expectations. Even if U.S. interest rates fall to a lower level of 2%, HSBC's performance is still expected to meet market expectations. The bank reiterated its "Overweight" rating on HSBC listed in London (HSBA.L), raising the target price from £12.3 to £14.

On the other hand, Barclays expects Standard Chartered (02888.HK) to see a continued improvement in tangible return on equity (RoTE) over the next few years, potentially reaching 15% by 2028, mainly driven by operational leverage. However, 2026 may be a transitional year, with less obvious upside risks to earnings compared to market expectations, and RoTE may drop to 13%. The bank reiterated its "In Line with Market" rating on Standard Chartered listed in London (STAN.L), raising the target price from £16 to £19.

Barclays stated that considering HSBC's greater potential for earnings per share and capital upside supported by strategic initiatives, it prefers HSBC; it raised its earnings per share forecasts for HSBC in 2026 and 2027 by 4% and 1%, respectively, due to faster integration after the acquisition of Hang Seng Bank. Meanwhile, it lowered Standard Chartered's earnings per share forecasts by 2% to 4%, due to weakening fee income and an increase in the number of shares