[ET Net News Agency, 28 April 2020] HSBC Holdings (00005) reported its 1Q earnings
during lunch break. Since Hang Seng Bank (HSB)(00011) does not report quarterly earnings,
Morgan Stanley looks at HSBC HK for a read-through to HSB earnings.
Since HSB is majority-owned by HSBC, it is likely to broadly reflect the trends as shown
in HSBC HK. HK credit costs picked up slightly to 17bps in 1Q from 15bps for 4Q 2019. Core
revenue (NII + fee income) should be broadly stable QoQ but trading income could get hit.
ECL (expected credit loss) could see a pick up too, as the macro assumptions adopted are
likely the same for both banks.
Morgan has highlighted in its preview note that 1Q is likely to be the strongest quarter
helped by higher rates in January/February and resilient activity level in 1Q. It sees
revenue progression tougher for the remaining quarters. ECL will most likely be on an
upward trend and could become higher if actual defaults pick up.
Morgan maintained its "underweight" call on HSB, with a target price of HK$110. (KL)
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00011 HANG SENG BANK
Nominal 
96.050 +0.150 (+0.156%) Others
28/04/2020 15:29
{I-bank focus}Hang Seng Bank's ECL seen on upward trend - MS
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