Citibank: HSBC Holdings (00005) had mixed results for the second quarter, and the scale of the repurchase was lower than expected

The Zhitong Finance App learned that Citibank released a research report saying that the second-quarter results of HSBC Holdings (00005) were mixed. Revenue was slightly better than expected, driven by wealth management business, and the net interest income guidelines were raised, but the scale of repurchases fell short of expectations and there were hidden concerns about cost guidelines. It maintained a “buy” rating, with a target price of HK$171.8.

Citibank pointed out that HSBC's adjusted profit before tax for the second quarter (excluding significant items) was US$10.3 billion, 5% higher than market expectations, and revenue was 2% higher than expected. It was mainly driven by non-net interest income (7% year-on-year increase, at a fixed exchange rate). Among them, the wealth management business increased 21% year over year; net interest income was US$11.6 billion, up 3% from quarter to quarter, which is roughly in line with expectations. Costs and impairment were generally in line with expectations. The common equity Tier 1 capital ratio was 14.1%, 10 pips lower than market expectations. The scale of the new round of repurchases was only 1 billion US dollars, far lower than the market's forecast of 2.2 billion US dollars.

Management updated its FY2026 guidance and raised the net interest income guideline from approximately US$46 billion to higher than US$46 billion (market estimate of US$46.5 billion). Although the cost growth guide maintained a target increase of 1% (approximately US$34.2 billion), the increase in supplementary floating compensation may cause a moderate increase in costs (market expectations of US$34.3 billion). In addition, management also made new comments on the 2027 fiscal year costs, stating that it will consider accelerating investment plans to support future growth, and that part of the cost increase will be offset by organizational simplification. Citi believes that the strong non-net interest income performance may be offset by higher cost guidance and lower repurchase scale. Market profit forecasts remain largely unchanged, and overall performance is mixed.