Citigroup: HSBC HOLDINGS (00005) target price raised to 156.7 Hong Kong dollars, earnings forecast upgraded.

Citi released a research report stating that based on HSBC HOLDINGS' first quarter performance and recent market uptrend driving wealth management and individual banking (IWPB) investment assets and revenue forecast, it is updating its profit forecast, raising the earnings per share forecast by 1% to 2% for the years 2026 to 2028. The bank expects HSBC's revenue to grow at an average annual rate of 5% from 2026 to 2028, in line with the management's target of 5% by 2028; Return on Tangible Equity (RoTE) is expected to reach 18% to 20%, above the 17% target. Citi reiterated a "buy" rating for HSBC, raising the target price from HK$153.4 to HK$156.7. The bank raised its forecast for HSBC's banking business net interest income by 0% to 1%, with a full-year forecast of $46.2 billion for 2026, close to the latest guidance of around $46 billion from the management; Non-interest income forecast for the banking business is raised by 2% to 5%, mainly from enhanced income from wealth management and corporate banking (CIB). Cost forecast is also raised by 1% to 2%, with a forecast of $34.4 billion for 2026, slightly higher than the implied guidance of $34.3 billion from the management. Overall, Citi's adjusted pre-tax profit forecast for HSBC is 2% to 6% higher than the market consensus. The bank notes that HSBC will hold an investor tour on May 20-21, hoping that the management will provide more details on the prospects after the integration of HANG SENG BANK, wealth management in the Asia Pacific region, corporate banking in the Asia Pacific region, and potential cost savings.