UBS: HSBC HOLDINGS (00005) showed strong performance in the last quarter, rated as "neutral".

UBS released a research report stating that HSBC HOLDINGS (00005) performed strongly in the fourth quarter of last year. Excluding tax profits from major projects, its pretax profits were 9% higher than market expectations, revenues were 3% higher than expected, and net interest income was 6% higher (5% higher excluding one-time items). However, fees and other income were 1% lower than expected, operating expenses were in line with expectations, and credit impairments were 12% lower than market forecasts. The common equity Tier 1 capital ratio for the period was 14.9%, higher than market expectations. Considering the impact of privatization of Hang Seng, the common equity Tier 1 capital ratio is 13.8%. UBS rates HSBC as "neutral" with a target price of 140.6 Hong Kong dollars. UBS pointed out that the group confirmed the net cost impact on the common equity Tier 1 capital ratio after the acquisition of Hang Seng at 110 basis points, better than expected. It is expected to bring in $900 million in profits by the 2028 fiscal year, with restructuring costs of $600 million. UBS believes that this transaction is significant in increasing HSBC's exposure to the Hong Kong banking business and simplifying the group's structure. HSBC declared a fourth quarter dividend of 45 cents per share and continued to suspend share buybacks, in line with market expectations. The management also provided new guidance for the 2026 fiscal year.