Morgan Stanley: Expects HSBC Holdings (00005) and Standard Chartered (02888) to focus on maintaining their RoE capabilities in their performance.

Morgan Stanley released a research report stating that Hong Kong banking stocks are about to announce their performance for the 2024 fiscal year. It is expected that the performance focus of HSBC HOLDINGS (00005) and STANCHART (02888) will be on maintaining the return on equity (RoE) ability, with the potential for HSBC to release more capital. The stable RoE outlook will support bank stock prices, while capital remains a focus of concern for Hong Kong banks. However, weak operating prospects will limit stock performance. Regarding HANG SENG BANK (00011), Morgan Stanley expects loan growth to continue to be weak, as asset yields decrease, net interest income should face pressure, but the decrease in deposit rates will only partially offset this pressure. Costs should be well controlled, with a year-on-year growth rate slowing to 4% in the second half of 2024. Credit costs are expected to continue to rise, and it is expected that Hang Seng may announce further buyback plans, with the buyback scale expected to reach HKD 6 billion this year. As for BOC HONG KONG (02388), Morgan Stanley expects loan growth to continue to be weak, with asset yields declining and net interest income facing pressure. However, the decrease in deposit rates partly offsets this pressure. Cost control is good, but costs are expected to decrease by 1% year-on-year in the second half of 2024. Expected credit costs will continue to rise, and it is not expected that there will be any major surprises in capital returns. For STANCHART, Morgan Stanley expects a 3% quarterly decline in net interest income due to weak loan volume, with total income expected to decline on a quarterly basis but record strong year-on-year growth. Strong growth prospects in wealth management are expected to be maintained, with a 16% growth expected in 2025. Costs are expected to increase by 10% quarter-on-quarter, driven by normal seasonal factors and bank fees of $120 million, with a 5% increase year-on-year. Credit losses are expected to increase quarterly, and at least $1 billion in further buyback announcements are expected to be completed by the first half of 2025. In the case of HSBC HOLDINGS, Morgan Stanley expects loan growth to continue to be weak, with asset yields facing pressure due to declining interest rates, but partially offset by the decline in Hong Kong deposit rates. Wealth and trading income are expected to show some seasonal weakness, but remain strong compared to the same period last year. Further buybacks are expected to be conducted as performance is announced, with a $2 billion buyback expected to be completed before the performance announcement in the first quarter of 2025. The new CEO is expected to outline further cost and capital efficiency measures while streamlining operations.