HSBC Holdings PLC received further backing from analysts after a stronger-than-expected fourth quarter and upgraded guidance for 2026, which sent the shares to new highs.
Fourth-quarter pre-tax profit excluding notable items beat company consensus by 9%, UBS said, driven by banking net interest income and lower impairments. CET1 capital of 14.9% was 20 basis points ahead of expectations.
Jefferies struck a similar tone, noting that adjusted Q4 pre-tax profit was helped by deposit growth and higher Hong Kong interest rates, though around $100 million of items are not expected to repeat.
Wealth was another bright spot, with fee and other income up 20% year on year and invested assets $80 billion higher than a year earlier.
For 2026, management guided to banking net interest income of at least $45 billion, about $1.5 billion above the $43.5 billion consensus. Costs are expected to rise just 1%, implying a cost base of roughly $33.8 billion, around $500 million better than market forecasts.
Taken together, Jefferies said the guidance points to high single-digit upgrades of around 7% to 2026 profit expectations, with $900 million of Hang Seng synergies by 2028, funded by $600 million of restructuring costs, which "investors should welcome".
Analysts at Shore Capital said the quarter "confirms strengthening earnings momentum, improving returns and robust capital
generation, supported by self-help and structural tailwinds".
While the Hang Seng transaction will temporarily crimp CET1 and delay buybacks, they said, "medium-term returns and distribution capacity remain well supported".
The shares trade on 1.8 times tangible book value and the bank is targeting a return on tangible equity of more than 17% from 2026 onwards.
Jefferies and Shore Cap have 'hold' ratings and UBS is 'neutral'.