JP Morgan raises STANCHART (02888) target price to 135 Hong Kong dollars, prefers HSBC HOLDINGS (00005).

J.P. Morgan released a research report stating that the target price for Standard Chartered (02888) has been raised from HK$120 to HK$135. They reiterated the "overweight" rating, with a total return rate of around 10% for 2025, which is comparable to HSBC Holdings (00005) and ranks among the highest in the Asia-Pacific region. However, the bank prefers HSBC Holdings, as it has higher visibility in terms of profitability and shareholder returns. The bank stated that they have raised Standard Chartered's adjusted earnings per share forecast for 2025 to 2027 by 6%, 5%, and 4% respectively. They have also raised the share buyback forecast for this year to HK$2.75 billion, with the possibility of HK$1.5 billion being announced in the first half of the year. The bank has increased their dividend forecasts for Standard Chartered, expecting a cumulative return to shareholders of USD 10.5 billion from 2024 to 2026, exceeding the group's target of over USD 8 billion and the market's estimate of around USD 9.5 billion. It is expected that the average tangible equity return rate will continue to increase, from 11.7% in the previous year to 13.2% in 2026. J.P. Morgan predicts a 4% growth in Standard Chartered's total revenue this year, with cost forecasts remaining broadly unchanged, maintaining the 2026 figure at HK$12.3 billion. The bank also mentioned that Standard Chartered added USD 24 million in provisions for Hong Kong commercial real estate in the fourth quarter of last year, mainly due to an increase in early warning signals resulting from downgrades in customer credit ratings. However, the exposure to Hong Kong commercial real estate is USD 2.6 billion, less than 1% of the group's total exposure, and all exposures are performing as expected. Therefore, the bank is confident in their credit cost forecasts for Standard Chartered in 2025 to 2027, which are 34, 35, and 36 basis points, respectively, falling within the guidance range of 30 to 35 basis points.