Ahead of HSBC Holdings' third-quarter results, Goldman Sachs fine-tuned its target price for the H shares to HK$192 and maintained its Buy rating. The outlook for net interest income in the banking business and the size of share buybacks are in focus.
Ahead of HSBC Holdings' third-quarter results, Goldman Sachs is reported to have fine-tuned its target price for the H shares from HK$193 to HK$192 and maintained its Buy rating. The target price for the UK-listed shares was left unchanged at 1,860 pence.
Goldman Sachs forecasts HSBC's third-quarter underlying profit before tax at $10.4 billion, up 14% year on year and 1% quarter on quarter, which would be 2% above market consensus. Net interest income in the banking business is forecast to rise 3% quarter on quarter, while net interest income in the non-bank business is forecast at $7.2 billion, up 6% year on year and down 2% quarter on quarter. Share buybacks are forecast at $500 million, down from $1 billion in the previous quarter.
Against a backdrop of improving interest-rate conditions, Goldman Sachs raised its forecasts for net interest income in the banking business for 2026–2028 by 0.3%, 1% and 1%, respectively, putting them at levels up to 3% above market consensus. Meanwhile, net interest income in the non-bank business is expected to slow after a strong second quarter, particularly in corporate and institutional banking.
Capital and shareholder returns remain in focus. The reduction in the size of third-quarter share buybacks was explained as reflecting the impact of loan growth and higher interest rates, while the common equity Tier 1 ratio is forecast at 13.9%, with the policy being to maintain it at approximately 14%.