Standard Chartered: Reiterates "Buy" rating on HSBC Holdings (00005) and raises target price to 98.7 Hong Kong dollars.

DBS Bank issued a research report stating that it has reiterated a "buy" rating for HSBC HOLDINGS (00005), with a target price raised from 84.2 Hong Kong dollars to 98.7 Hong Kong dollars. The bank believes that the high visibility of Return on Tangible Equity (ROTE) supports further valuation re-rating, and expects shareholder returns to be attractive with a dividend yield of around 5% this year. The bank has raised its pre-tax profit forecast for HSBC in the next two years by 5% to 7% to reflect stronger net interest income expectations in a high interest rate environment for a longer period, overall, it is expected that income and profits will see a slight year-on-year increase between 2025 and 2027. DBS Bank pointed out that HSBC's performance last year met expectations, with pre-tax profit increasing by 8% year-on-year to 32.3 billion US dollars. Following its restructuring, the bank has provided strong guidance for this year's net interest income of the bank and cost savings from 2025 to 2027. With the positive outlook for its restructuring, the bank has raised its expectations for Return on Tangible Equity (ROTE) for the next two years from between 14.2% to 14.7% to between 15% and 15.5%. It is also expected that share buybacks in the next two years will be comparable to 2024 levels, primarily driven by strong capital position and sustainable ROTE support, which is believed to be a key catalyst for the stock price.