JP Morgan raises target price for HSBC HOLDINGS (00005) to HKD 200. Second quarter revenue expected to show strong growth driven by net interest income.

JP Morgan released a research report stating that it is expected that HSBC HOLDINGS (00005) will see steady growth in profits in the second quarter due to improvements in net interest income and operating leverage. However, the increase in credit costs will partially offset these positive effects. The bank has raised its target price for HSBC Holdings from HK$182 to HK$200 and maintains a "overweight" rating. The bank predicts that HSBC Holdings' second quarter revenue will increase by 6% year-on-year, mainly driven by an 8% year-on-year increase in net interest income from banking operations, while non-interest income growth is expected to be more moderate at 3% year-on-year. Wealth management revenue is performing strongly, with an expected 16% year-on-year increase. The bank expects operating expenses to increase by 2% year-on-year, and pre-provision operating profit to increase by 10% year-on-year. JP Morgan estimates HSBC Holdings' annualized credit costs for the second quarter at 50 basis points, with around US$200 million related to expected credit loss provisions for an exposure of approximately US$400 million to the Dubai-based integrated enterprise IFFCO Group, as reported by the bank. Overall, the bank expects HSBC Holdings' adjusted pre-tax profit to increase by 7% year-on-year in the second quarter. The bank has raised its earnings forecasts for HSBC Holdings for the years 2026 to 2028 by approximately 2%, mainly driven by stronger net interest income from banking operations. Fee income (especially from banking and market operations) is slightly strengthening, but this is partially offset by rising costs. The bank expects management to raise its net interest income guidance for 2026 from around US$46 billion to around US$47 billion.