Goldman Sachs: Raise the target price of HSBC Holdings (00005) to HK$181 and expect strong results for the next quarter

The Zhitong Finance App learned that Goldman Sachs released a research report saying that HSBC Holdings (00005) will announce the results for the second quarter of 2026 on August 4. The expected basic profit before tax will reach 10.2 billion US dollars, up 25% year on year and 2% quarterly, 4% higher than market expectations. The bank pointed out that the quarterly increase was mainly due to the reduction in credit costs to 40 basis points. It is expected that there will be no additional provision related to the Middle East conflict, and the increase in provisions in the first quarter was also affected by one-time credit-related expenses. Furthermore, banks' net interest income is expected to increase by 3% quarterly, driven by a slight increase in interbank interest rates in Hong Kong. The bank raised the target price of FX Control for 12 months from HK$165 to HK$181, maintaining a “buy” rating.

The bank continued that in addition to forecasting quarterly performance, the market focus will continue to focus on wealth management business, particularly the latest developments in China's cross-border regulatory policies and their impact on wealth capital inflows. In terms of capital and shareholder returns, after being suspended for three quarters due to the acquisition of Hang Seng, Foreign Exchange Control is expected to resume share repurchases this quarter. The bank predicts that the second-quarter results will announce a share repurchase plan of 1.5 billion US dollars. After completion, the common equity Tier 1 capital ratio (CET1) will remain at a steady level of about 14%. Goldman Sachs raised FX's earnings per share forecast for the 2026-2029 fiscal year by up to 1.6%, mainly reflecting a more favorable interest rate outlook.