[ET Net News Agency, 20 April 2020] Citi Research lowered its target price for HSBC
Holdings Plc (00005) to HK$39.6 from HK$44.9 and maintained its "neutral" rating.
The research house cut its HSBC EPS estimate for 2020 by 4% to 39c. Its 2020 PBT cut of
4% to US$14bn was driven by a 10% increase in loan loss provisions to US$6bn or almost
60bps of average group loans.
Citi factored in an increase in IFRS9 ECL (expected credit loss) balances to reflect the
changed macroeconomic outlook and specific NPL charges as well for this year.
Citi said HSBC's core HK business is the profit and capital generation rock on which the
international group is built. The asset quality of HSBC HK is exceptional. Even under
stressed scenarios, HSBC HK would experience only a minimal 10bps increase in ECL
provision top-up. (KL)