JPMorgan Forecasts Strong First-Quarter Momentum for HSBC and StanChart; Prefers HSBC

JPMorgan has released a research report indicating expectations for HSBC HOLDINGS (00005) to achieve a 5% year-on-year increase in revenue and a 4% rise in adjusted pre-tax profit for the first quarter. In contrast, STANCHART (02888) is projected to experience slower growth, with revenue up 3% and pre-tax profit flat. The report notes that, due to uncertainty surrounding interest rate trends, neither bank is likely to adjust their net interest income guidance at this stage. JPMorgan anticipates robust performance in the financial markets segment for both banks, benefiting from foreign exchange and interest rate volatility. Wealth management business momentum remains strong, averaging 16% year-on-year growth, supported by a 12% increase in Hong Kong visitor numbers and a vibrant IPO market, though this is partially offset by weaker sentiment following market declines. The firm also expects HSBC HOLDINGS to resume share buybacks during the second-quarter earnings announcement under current conditions. Regarding the macro environment, JPMorgan believes HSBC HOLDINGS stands to benefit more than STANCHART, as the UK interest rate outlook has turned notably hawkish. UK operations account for 31% of revenue and 18% of pre-tax profit for HSBC HOLDINGS in fiscal 2025, compared to just 8% of revenue and 3% of pre-tax profit for STANCHART. Given the uncertain trajectory of Middle East conflicts, the firm prefers HSBC HOLDINGS over STANCHART until the situation becomes clearer. Both companies maintain "overweight" ratings.