HSBC 02 (0005) (Jun 10 - Dec 24)

[winston]

HSBC (5 HK / HSBA LN) - An expected soft quarter

Based on consensus estimates, HSBC is forecasted to have about 10% YoY decline in profit before tax (PBT) in 2Q22.

The decline in PBT would be mainly due to softer revenue growth & expected higher credit costs.

USD appreciation & soft non-net interest income (NII) revenue should weigh on revenue growth.

Having said that, NII should benefit from net interest margin (NIM) expansion Its solid cost discipline should help offset soft revenue growth.

Overall asset quality is expected to remain stable with UK asset quality remaining healthy & HK asset quality showing signs of recovery after a gradual reopening. Management guided 2022 credit costs to normalise towards around 30bps.

While the share price of HSBC has outperformed the Hang Seng Index year-to-date, it underperformed its peers.

The stock is trading at 0.7x forward price-to-book (P/B) & is offering 4.4% FY2022 dividend yield.

Within the HK international banks, we prefer Standard Chartered bank despite preferring HK domestic banks to HK international banks.

Although HSBC could benefit from rising interest rates, the downside risks of the global economy slowing down on the back of higher interest rates should not be ignored.

We finetune our Fair Value estimate at HKD61, implying a forward P/B (representing historical average level) multiple of 0.9x. BUY.

Source: OCBC

[winston]

not vested

A third of HSBC's US$12b China property exposure impaired

by Denise Wee & David Scanlan

HSBC Holdings plc has said it will take further charges against its more than US$12 billion of exposure to China commercial real estate as a third of those assets are "substandard" or "impaired".

Source: Bloomberg

https://www.theedgemarkets.com/article/ ... e-impaired

[winston]

not vested

HSBC Holdings (5 HK): <Results first take> 1H22 results above market expectation [BUY, TP HK$62.40]

HSBC 1H22 results are significantly above market expectation. 2Q22 profit to shareholders was USD 5,486m, while consensus expectation was 2,695m.

2Q22 NII increased by 20% y-o-y to USD 7.5bn, as NIM improved by 15bps y-o-y or 9bps q-o-q to 1.35%. Overall loan to customer balance dropped by 3% to USD 1,028bn. Non-NII increased by 2% y-o-y to USD 5.7bn.

Reported annualized ROTE was 9.9% in 2Q22, vs 9.4% in 2Q21. HSBC has also updated its ROTE targets from at least 10% by FY23 to 12%+ from FY23 onwards.

Dividend per share of $0.09, up $0.02 vs. 1H21. It guides to restore paying quarterly dividends from 2023 and onwards and expect c.50% payout ratio for FY23/24F.

Source: DBS

[winston]

not vested

HSBC Holdings (5 HK)

HSBC released better-than-expected interim results with 1H22 reported profit before tax of USD9.17b (-15.3% YoY), beating consensus forecast in a range of USD7.9b-8.1b.

The board has approved an interim dividend for 1H22 of USD0.09 per ordinary share, to be paid in cash.

Looking ahead, HSBC stated that:-
(1) further share buy-backs remain unlikely in 2022E;
(2) expects a dividend payout ratio of c.50% for 2023E and 2024E;
(3) intends to revert to paying a quarterly dividend in 2023E.

Source: Maybank

[winston]

not vested

China/Hong Kong: HSBC Holdings (5 HK): Cost savings with higher NII growth to drive re-rating (BUY, Reinstate coverage, TP HK$63.90)

Expect further improvement in returns and recovering dividend payout in FY23/24F following a strong 1H22

Restructuring plan in FY20-22 is well on track to bringing higher returns

Expect strong NII growth in FY23/24F, as HSBC is well positioned for the current rate cycle

Reinstate coverage with BUY and TP at HK$63.9

Source: DBS

[winston]

not vested

HSBC (5 HK): <Earnings First Take> 3Q22 results above consensus; senior management changes [BUY, TP HK$63.90]

HSBC (5 HK) reported 3Q22 PBT/Net profit to shareholders at USD 3,147m/1,913m, above consensus expectation of USD 2,452m/1,808m

HSBC delivered solid 3Q22 results with 18% y-o-y growth in 3Q22 adjusted PBT (USD 6.5bn).

Highlights are;-
1) higher-than-expected NIM and NII growth;
2) improving operating efficiency and stable costs; and
3) ROTE improvement on track with adjusted annualized ROTE of 10.8% in 9M22

The 12% ROTE target and 50% dividend payout ratio for FY23F is unchanged. But the NII guidance was revised down slightly from USD 37bn to USD 36bn in FY23F.

The recession risk and FX risk remain as the key investor worries in FY23F

We don’t expect material impacts on fundamentals from the senior management change.

Source: DBS

[winston]

not vested

Brokers│Views

Goldman Sachs│Quarterly results beat

Guotai Junan International│Earnings expected to further benefit from rising interest rates

UBS│Quarterly revenue robust; 2023 guidance broadly stable

DBS│Valuation re-rating driven by cost-optimization, NII growth

Morgan Stanley│Quarterly results beat

Citigroup│2023 NII guidance disappointing

JPMorgan│NII, revenue strong, but with limited upside

Credit Suisse│Adjusted profit before tax beat, with higher-than-expected provisions; capital performance in line

Jefferies│Quarterly results beat on robust NII

CICC│Growth outlook clouded by exposure to Chinese property sector and U.K. economy

Source: AAstocks.com

http://www.aastocks.com/en/stocks/news/ ... t-news/HK6

[winston]

not vested

HSBC (5 HK / HSBA LN) - Net interest margin trend should remain positive

HSBC had a robust net interest margin (NIM) expansion in 3Q22 & we believe NIM trends to remain positive though the rate hike momentum could moderate.

As such, management revised up net interest income guidance for 2022 to USD32b.

HSBC announced an agreement to sell its banking business in Canada at a consideration of CAD13.5b in November 2022 & is expected to complete in 4Q23. It is estimated that the disposal could enhance Common Equity Tier 1 ratio by about 130bps, which could support the potential to reinstate buybacks.

While the share price of HSBC has risen 38% since November 2022, it slightly underperformed the Hang Seng Index & its peers by around 2ppt.

The stock is trading at 0.8x forward price-to-book (P/B), which is below historical average, & is offering 7% FY2023 dividend yield.

Within the HK international banks, we prefer Standard Chartered bank (owing to its cleaner credit cost situation with relatively more Asia & Emerging Market exposures) despite preferring HK domestic banks to HK international banks.

Although HSBC could benefit from rising interest rates, there are downside risks of the global economy slowing down (especially in UK and Europe).

We lift our fair value estimate to HKD69 (5 HK) / GBp677 (HSBA LN), implying a forward P/B multiple of 1.0x. BUY. (Rese

Source: OCBC

[winston]

HSBC shares tumble in Hong Kong on risky bond exposure concerns

by Charlotte Yang

Worries over risky bond exposures related to Credit Suisse Group AG.

The Credit Suisse deal has left some bondholders with significant losses, and investors in the region may be reexamining exposure to financial market turmoil and tail risks.

A Swiss regulator said US$17 billion (RM76.17 billion) of such products from Credit Suisse will be wiped out following the bank’s sale. The turmoil is potentially sending the US$275 billion market for bank funding into a tailspin.

Source: Bloomberg

https://www.theedgemarkets.com/node/659855

[winston]

not vested

HSBC interim profit seen at US$21b, buyback on cards

HSBC (0005) is expected to post an interim pre-tax profit between US$20.8 billion (HK$162.2 billion) and US$21.2 billion and announce a new US$2 billion share buyback tomorrow.

The second interim dividend is expected to be kept steady at 10 US cents per share from the first quarter, according to forecasts from investment banks.

The Europe's largest bank has beat market expectations with a pre-tax profit of US$12.9 billion in the first quarter this year and resumed paying quarterly dividends for the first time since 2019.

And its Hong Kong-listed shares saw a 41 percent rise so far this year to HK$64.8, the highest since June 2018. That compared with a 0.7 percent gain in the city's benchmark the Hang Seng Index.

JP Morgan expects the Asian-focused lender to record a pre-tax profit of US$20.97 billion during the first six months of this year.

For the second quarter alone, the US investment bank noted that HSBC may see a 74 percent year-on-year increase in pre-tax profit to US$8.1 billion, although it would be a 37 percent decline from the previous quarter.

BofA Securities expected HSBC to post an interim pre-tax profit of US$20.8 billion amid rising interest rates despite the loan business being pressured.

Both JP Morgan and BofA expected HSBC to reveal an additional share buyback of up to US$2 billion this week, compared with a median forecast of US$1.3 billion. The London-headquartered lender had announced a US$2 billion share repurchase plan when unveiling first-quarter financial results.

Kenny Wen Kit, head of investment strategy at KGI Asia, said that although HSBC is still attractive based on overall performances after the rise in shares, investors may consider buying shares when they retreat to below HK$58.

Source: Reuters

https://www.thestandard.com.hk/section- ... k-on-cards