Citigroup issued a research report stating that, based on HSBC Holdings PLC's first-quarter results and the recent market uptrend boosting projections for investment assets and revenue in its Wealth and Personal Banking (WPB) segment, it has updated its profit forecasts. The bank raised its earnings per share forecasts for 2026 to 2028 by 1% to 2%. It anticipates that HSBC's revenue will grow at an average annual rate of 5% from 2026 to 2028, aligning with management's target of reaching 5% by 2028. The return on tangible equity (RoTE) is projected to reach 18% to 20%, exceeding the 17% target. Citigroup reiterated its "Buy" rating on HSBC and raised its target price from HK$153.4 to HK$156.7.
The bank increased its forecast for HSBC's net interest income from banking activities by 0% to 1%, with the full-year 2026 projection at $46.2 billion, close to management's latest guidance of approximately $46 billion. The forecast for non-interest income from banking activities was raised by 2% to 5%, primarily due to enhanced revenue from wealth management and corporate banking (CIB). Cost forecasts were increased by 1% to 2%, with the 2026 projection at $34.4 billion, slightly above management's implied guidance of $34.3 billion.
Overall, Citigroup's adjusted pre-tax profit forecast for HSBC is 2% to 6% higher than the market consensus. The bank noted that HSBC will hold an investor tour on May 20-21 and expects management to provide more details regarding the post-integration prospects of Hang Seng Bank, wealth management in the Asia-Pacific region, corporate banking in the Asia-Pacific region, and potential cost savings.
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