The Zhitong Finance App learned that J.P. Morgan Chase released a research report saying that the focus of the third quarter analyst briefing of HSBC Holdings (00005) was neutral to negative. Management acknowledged the intensification of deposit competition between the UK and Hong Kong, with the Hong Kong market under greater pressure. Considering that Hong Kong's loan-to-deposit ratio is only 43%, this situation came as a surprise to the bank. The bank maintains HSBC Holdings' “plus” rating and a target price of HK$205.
The bank pointed out that due to changes in management deposit strategies, the reference value of Hong Kong's time deposit share, which peaked at around 40% from 2023 to 2024, declined; the ratio was 38% in the third quarter of 2026. This means that the share of time deposits is likely to rise further, and banks' net interest income forecasts face downside risks.
Management also reminded the market to pay attention to the impact of the sale of business. Of the $2.2 billion related revenue loss, about half is expected to be reflected in net interest income by 2028. Cost realignment is expected to generate incremental revenue that exceeds the revenue loss described above, but there is a time lag.
In terms of positive factors, management said that the 2026 credit cost guideline is 45 basis points or there is room for decline; the annualized credit cost for the first nine months is 42 basis points, and the annual market forecast is 44 basis points.
The bank said that after the announcement of the results, the stock price of HSBC Holdings fell by about 6% on the afternoon of October 27, and the Hang Seng Index fell 1% during the same period. Based on the current valuation, the expected dividend rate in 2027 and total shareholder returns (dividends plus repurchases) are still around 5.2% and 8.2%, respectively, even assuming a medium single-digit reduction in market expectations.
However, J.P. Morgan Chase expects the stock price of HSBC Holdings to run rampant in the near future, because the market may not rush to bottom until the growth prospects in 2027 are more clear, or there is a clear gap between the dividend ratio of about 5.1% compared to the average expected dividend rate of the four major state-owned banks H shares in 2027.