To The Moon

Goldman Sachs has issued a research report indicating that HSBC Holdings PLC (HSBC) is scheduled to release its second-quarter 2026 financial results on August 4th. The bank anticipates underlying pre-tax profit to reach $10.2 billion, marking a 25% year-on-year increase and a 2% rise from the previous quarter, which would exceed market expectations by approximately 4%.

The report suggests the sequential improvement is primarily driven by a reduction in credit costs to 40 basis points, with expectations that no additional provisions related to Middle East conflicts will be required. The elevated provisions in the first quarter were attributed to one-off credit-related charges.

Furthermore, a slight increase in the Hong Kong Interbank Offered Rate is expected to contribute to a 3% quarter-on-quarter growth in the bank's net interest income.

Consequently, Goldman Sachs has raised its 12-month price target for HSBC from HK$165 to HK$181, reiterating its "Buy" rating.

Looking beyond the quarterly performance, the report notes that market attention will likely remain focused on the wealth management business, particularly the latest developments in China's cross-border regulatory policies and their impact on wealth fund inflows.

Regarding capital and shareholder returns, following a three-quarter pause due to the acquisition of Hang Seng, HSBC is projected to resume its share buyback program this quarter. Goldman Sachs forecasts the Q2 results will announce a $1.5 billion share repurchase plan. Upon completion, the Common Equity Tier 1 (CET1) ratio is expected to remain robust at around 14%.

Goldman Sachs has also increased its earnings per share forecasts for HSBC for fiscal years 2026 through 2029 by up to 1.6%, largely reflecting a more favorable interest rate outlook.