Search Share Prices
HSBC offers growth and yield, Morgan Stanley sees more to come
HSBC's "unique set-up" offers investors growth and yield, said Morgan Stanley on Tuesday as it upped its forecasts for the next couple of years and said "there is more to go" from the shares.
The investment bank predicts group net interest income will "ratchet higher", with forward-driven advantage across key currency blocks at $2.6bn to lift net interest income forecasts by additional 2%.
Analysts model a 9% three-year compound annual growth rate of net interest income from the group, 4% above consensus revenues in 2019/20, with additional USD-block upside.
"We like the bank's corporate and commercial business, particularly in Asia, as the NII upside in global transactional banking and fee upside in wholesale bank come through," was a second box-tick, with Asian financial integration and wealth growth/savings transformation "key" to this and market share gains already evident.
Finally, CET 1 capital is expected to build to 14.7% by 2020, giving an excess of around $12bn or 59 cents per share that would equate to a circa-5.1% yield in line with European banks.
"Uniquely, we also see growth," the analysts said, with new forecasts putting earnings 7% above the consensus, which is felt to be underestimating the positive NII impact as global rates go up and the capital options available.
The stock is rated a 'conviction overweight', with a 900p share price target.