UBS: HSBC Holdings' fourth quarter performance is strong, rated "Neutral"

UBS released a research report stating that HSBC Holdings' performance in the fourth quarter of last year was strong. Excluding the profits before tax of major projects, it exceeded market expectations by 9%, with revenues exceeding expectations by 3% and net interest income by 6%. However, fees and other income were 1% lower than expected, operating expenses were in line with expectations, and credit impairment was 12% lower than market forecasts. The common equity tier one capital ratio for the period was 14.9%, higher than market expectations. Taking into account the impact of the privatization of Hang Seng, the adjusted common equity tier one capital ratio is 13.8%. UBS pointed out that the net cost impact of this acquisition on the common equity tier one capital ratio after the acquisition of Hang Seng by the group is 110 basis points, better than expected, and is expected to bring in $900 million in revenue by fiscal year 2028, with restructuring costs of $600 million. UBS believes that this transaction is of significant importance in increasing the exposure of HSBC to the Hong Kong banking business and simplifying the group's structure. HSBC announced a fourth quarter dividend of 45 cents per share, continuing to suspend share buybacks, in line with market expectations. UBS has a "neutral" rating on HSBC, with a target price of 140.6 Hong Kong dollars for the Hong Kong stock and 1309 pence for the London listing.