[ET Net News Agency, 3 August 2020] Morgan Stanley said HSBC Holdings' (00005) PBT
(profit before tax) missed by 12%, driven entirely by higher provision build (US$3.8bn) -
similar dynamics to what it has been seen in 1Q.
With 1-month HIBOR in particular now at 25bps (average 33bps in July), NIM (net interest
margin) should continue to fall into 3Q and year-end, said the research house. HSBC has
maintained its guidance that 2020 NII (net interest income) will be at least US$3bn lower
than 2019, with resultant lower 2H NII.
HSBC's 2Q ECL (expected credit loss) charge was at US$3.8bn, +30% QoQ. UK charge
constituted 38% of the group charge, at US$1.45bn ECL. ECL in Asia ex-HK has decreased
markedly. HSBC increased its ECL guidance to a new range of US$8-13bn in 2020 (up from
US$7-11bn range in 1Q), with wide implied US$500mn-3bn quarterly impairment range in 2H.
Morgan maintained its "underweight" rating on HSBC, with a price target of HK$42. (KL)
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00005 HSBC HOLDINGS
Nominal 
62.200 +0.050 (+0.080%) Research Report
03/08/2020 14:34
{I-bank focus}HSBC's (00005) NIM seen to fall into 3Q & 4Q
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