HSBC Holdings PLC (LSE:HSBA) shares hit a six-year high after its third-quarter results received a warm welcome from investors and analysts who enjoyed the lending giant making hay while the sun shines.
The performance was driven by its Wealth division, up 28%, said analyst Edward Firth at Keefe, Bruyette & Woods, along with strong new business flows in Life and robust Markets, up 13%.
While net interest margin at 1.46% was "weak", down 0.16% on the prior quarter, this was partly driven by legacy losses and what wat more important for now, suggested Firth, was that revenue and profit were ahead of expectations and implies full-year consensus upgrade of circa 5-6%.
"China stimulus is clearly supporting near term earnings and the bank offers enviable levels of cash return near term," Firth said, as HSBC returns its CET1 capital levels towards its 14-14.5% target.
"However neither are likely to be sustained long term," he warned.
Analysts at Jefferies said they saw the results only as "steady", with strength in non-interest income, some "noise" in net interest income and a miss on credit costs, where the Hong Kong credit loss "looks high" as does the $160 million quarterly increase in the UK.