HSBC Holdings PLC (LSE:HSBA), which reports third-quarter results on Tuesday 25 October, shares are the second best performing of the FTSE 100 banks this year even though they are virtually flat, while Standard Chartered PLC (LSE:STAN) is way out in front with a gain of over 22%.
This here are many similarities between the pair, though, including the bosses of both have been working hard to slash costs.
Both face a risk of higher taxes in the UK, though this is not their main market, as well as slowing global growth and pressure on key Asian markets from the ever-stronger US dollar, but both StanChart and HSBC are expected to benefit from rising interest rates.
Provisions for bad loans have been flagged by both banks but widening net interest margins (NIMs) are expected to more than offsetting this.
Analysts at Goldman Sachs (NYSE:GS) said the pair are in a “sweet spot” as funding pressure in key markets is light and market interest rates have risen rapidly”.
These results are expected to see an increase in NIM – the key banking measure that shows the difference between rates on savings and loans – despite the sluggish macroeconomic backdrop.
Income from StanChart’s investing banking arm (CCIB) is likely to be strong given the continued high volatility in the currency markets and robust CCIB reports from Wall Street rivals - with some analysts also seeing it as best positioned in the sector.
HSBC has been dogged by various issues though, such as unhappy major investor Ping An pushing for a break-up of the group and difficulty cutting costs, so these results could offer some respite or pile on the pressure.
But besides NIM and NII, Goldman does not expect the event will “hold any other surprise with respect to key financial metrics/performance”, with costs seen flattish , guidance of up to 2% growth next year to remain intact and the below-target CET level expected “to improve towards the bottom end of the target range by end of this year”.
Goldman was not tipping the London-listed shares but UBS predicted “substantial upside and solid capital returns in prospect”.
Reported profit before tax for HSBC is expected to be US$902mln, adjusted PBT US$5.6bn, according to UBS forecasts, with the CET1 capital ratio reduced to 13.1% from 13.6% at the half year.