Goldman Sachs: HIBOR recovery is expected to only give HSBC Holdings (00005) a “buy” rating among expected bank stocks

The Zhitong Finance App learned that Goldman Sachs released a research report saying that Hong Kong's 1-month interbank interest rate (HIBOR) hit 2% for the first time since May. The average value since August is about 1.1%, while the average for June and July was 0.7% and 1%, respectively. The bank's average values for August and September are expected to reach 1.3% and 1.6%, while the average values for the third and fourth quarters were 1.3% and 2.3%, respectively, compared with 3.9% and 2% in the first quarter and the second quarter. According to the bank, HIBOR's upward trend is basically in line with expectations.

According to the report, with the normalization of HIBOR and the narrowing of the gap with the US interest rate, the bank expects net interest spreads from local banks to be the weakest in the second half of the year, but net interest income, total revenue and profit before provision (PPOP) will begin to recover from the first half of 2026, as the HIBOR average is expected to rise back to 2% to 2.5% between 2026 and 27.

The bank said that although HIBOR's downturn since May has eroded banks' net interest spreads, the Bank of Hong Kong's stock price is still resilient. The market seems to have absorbed the positive factors of HIBOR's lower, including increased processing fee revenue, lower credit costs, and a recovery in demand for loans. The bank maintains a selective strategy. It only gives HSBC Holdings (00005) a “buy” rating with a target price of HK$110; at the same time, it gives the Bank of East Asia (00023) a “sell” rating, with a target price of HK$10.5.