[ET Net News Agency, 27 October 2020] Goldman Sachs said HSBC Holdings' (00005) 3Q
underlying PBT (profit before tax) of US$4.3bn is 47% above Goldman's estimate. The beat
was largely driven by lower than expected credit charges but supported by better than
expected market-related income.
Costs came modestly below expectation and management is confident about exceeding the
US$4.5bn cost save target set out in February 2020 as well as US$100bn RWA (risk-weighted
assets) reduction target.
Furthermore, the capital position was better than expected and the group announced that
the board would consider whether to pay a "conservative" dividend for 2020, albeit subject
to regulatory consultation.
The management expects further QoQ pressure on NII (net interest income) with "some"QoQ
stabilisation moving into 2021. But Goldman believes any further pressure is already
beaked into consensus estimates, also as there would be balance sheet growth into 2021
which should help.
Goldman maintained its "buy" rating and a target price of HK$50 on the stock. It expects
dividend resumption and improving earning performance (via lower credit charges) to
reverse the underperformance. (KL)