[ET Net News Agency, 18 February 2020] Goldman Sachs sees HSBC's (00005) updated
strategy as better in terms of RWA cuts (US$100bn versus US$70bn), but worse in terms of
capital return, which appears to be more back end loaded, with no buybacks planned for
2020 and 2021.
The group expects to run at a higher level of CET1 (towards 15%) throughout the
restructuring period, with the plan being to redeploy freed up capital in Retail Banking
and Wealth Management (RBWM) and Asia.
All-in, the research house believes HSBC is pursuing the right strategy, reallocating
capital to higher return segments. In terms of share price reaction, Goldman believes the
slightly better guidance in terms of 2022 profitability is likely to be offset by the
group having to run at higher capital levels in the interim and concerns regarding the
pending CEO appointment.
Goldman maintained its "buy" call and HK$75 target price. (KL)