Following the release of HSBC Holdings' (5.HK) latest third-quarter results, major international investment banks have successively published research reports, with the overall view exhibiting a pattern of "strong capital strength but short-term earnings under pressure."
HSBC's third-quarter underlying profit before tax and share buyback plan were broadly in line with market expectations. However, weighed down by factors including intensifying deposit competition, weaker net interest income, and slowing wealth management fee income, its operating income and pre-provision operating profit both came in approximately 2% to 3% below market expectations.
Although management reiterated its full-year key targets and guidance, including maintaining its 2026 net interest income forecast of at least US$46 billion, and announced a dividend of 10 US cents per share alongside a US$1 billion share buyback plan.
Major investment banks, while fine-tuning their price targets, still demonstrated strong consensus, with the overall stance remaining predominantly bullish and overweight.
Intensifying Interest Spread and Deposit Competition: Core Interest Income Faces Structural Headwinds
In this quarterly disclosure, the core focus of the market and major investment banks centered on net interest income (NII) and changes in deposit structure.
Goldman Sachs and JPMorgan both pointed out that HSBC faces deposit competition pressure in the UK and especially in the Hong Kong market that exceeds expectations.
JPMorgan specifically noted that given the current loan-to-deposit ratio in the Hong Kong market is only 43%, such intense deposit competition in Hong Kong is somewhat surprising, and management's overall tone at the analyst briefing leaned neutral to negative.
Goldman Sachs analyzed that, affected by higher-than-expected deposit beta and the shift from current account savings accounts (CASA) to time deposits, if the overall market environment remains weak, this trend of deposits shifting toward higher-yielding products will continue.
However, Goldman Sachs also mentioned the bank's own strategic considerations behind this, namely that part of the pressure stems from HSBC's own positioning in the Hong Kong market. The bank is planning to fully defend and capture deposit market share in Hong Kong to support stronger loan growth in the future, and to rebuild its market positioning after advancing the privatization of Hang Seng Bank.
UBS stated that HSBC's share price has already retreated approximately 14% over the past month, which it believes has fully reflected concerns about higher deposit beta and potentially weaker bank net interest income, and it continues to view HSBC as a bank benefiting from structural growth in Asian deposits and wealth.
Capital Returns and Cost Control Provide Support: Asset Quality and Franchise Advantages Offer a Buffer
Despite pressure on the core revenue side, major banks generally acknowledge HSBC's defensive attributes in capital management, cost control, and asset quality.
Morgan Stanley pointed out that HSBC's announced share buyback plan of up to US$1 billion, while exceeding Morgan Stanley's previous estimate of US$500 million, was still broadly in line with market consensus, and the third interim dividend was maintained at 10 US cents per share, demonstrating excellent dividend stability.
BofA Securities and Goldman Sachs also agreed that the weaker revenue performance was largely offset by lower-than-expected impairment provisions and excellent cost control.
BofA emphasized that HSBC's franchise advantages still hold significant value, and it is expected to continue benefiting from Asia's structural growth trends over the long term.
Major Bank Ratings and Price Target Divergence: Bullish Camp Fine-Tunes Estimates, Cautious Camp Focuses on Interest Spread Compression
Affected by weaker net interest income and wealth business growth momentum, major investment banks have generally fine-tuned their earnings forecasts and price targets for HSBC. However, they have shown a high degree of consensus in their overall stance, namely that the vast majority of major banks still maintain bullish or overweight ratings, with downward revisions precisely controlled within a small correction range of approximately 2%.
In the bullish or overweight camp, JPMorgan maintained its "overweight" rating with a price target of HK$205, noting that its share price will primarily consolidate sideways in the short term; Goldman Sachs maintained its "buy" rating, lowering its price target by 2% from HK$192 to HK$188; Morgan Stanley maintained its "overweight" rating, cutting its price target by 2.2% from HK$176.9 to HK$173, and reduced its earnings per share forecasts for 2027 to 2028 by 0.7% to 2.7%; BofA Securities reaffirmed its "buy" rating on the UK-listed shares (HSBA.L), but slightly lowered its price target by approximately 2% from 1,720 pence to 1,685 pence (equivalent to approximately HK$175.91).
In the cautious or neutral camp, UBS maintained its "neutral" rating on HSBC, keeping its UK-listed share price target at 1,501 pence.
Overall, HSBC, backed by its strong capital strength and franchise advantages, possesses good medium-to-long-term defensive allocation value. However, constrained by interest spread competition and fine-tuning of earnings expectations, its short-term share price will likely maintain sideways consolidation within the existing range, and further breakthroughs will still require attention to the stabilization of deposit structure and the pace of recovery in core interest income.
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