Goldman Sachs: Raises HSBC's target price to HK$181, expects second-quarter underlying pre-tax profit to increase by 25% year-on-year.

Goldman Sachs released a research report stating that HSBC Holdings will announce its performance for the second quarter of 2026 on August 4, with expected underlying pre-tax profit reaching $10.2 billion, a year-on-year increase of 25% and a quarter-on-quarter increase of 2%, exceeding market expectations by 4%. The bank pointed out that the quarter-on-quarter growth is mainly benefited from credit costs decreasing to 40 basis points, with no expected additional provisions related to conflicts in the Middle East, and the increase in provisions in the first quarter was also affected by one-time credit-related expenses. In addition, driven by a slight increase in Hong Kong interbank rates, the bank's net interest income is expected to increase by 3% quarter-on-quarter. The bank further stated that apart from the quarterly performance, the market focus will continue to be on the wealth management business, especially the latest developments in cross-border regulatory policies and their impact on wealth fund inflows. Regarding capital and shareholder returns, after suspending share buybacks for three quarters due to the acquisition of Hang Seng, HSBC is expected to resume share buybacks this quarter. The bank predicts that a $1.5 billion share buyback plan will be announced for the second quarter, and after completion, the common equity tier 1 capital ratio will remain at a stable level of around 14%. Goldman Sachs raised its earnings per share forecast for HSBC for the fiscal years 2026 to 2029 by up to 1.6%, reflecting more favorable interest rate prospects, and raised the 12-month target price from HK$165 to HK$181, maintaining a "buy" rating.