Goldman Sachs has released a research report reiterating a Buy rating on STANCHART (02888), raising its 12-month target price from HK$267 to HK$276. This upward revision reflects stronger revenue momentum from the Wealth Solutions business, leading to a 4% increase in the 2026 fiscal year earnings per share forecast, while estimates for the 2027 and 2028 fiscal years remain largely unchanged.

The bank noted that STANCHART's second-quarter earnings exceeded market and Goldman Sachs' expectations by 17% and 11%, respectively. This outperformance was primarily driven by robust non-net interest income, lower provisions, slightly better-than-expected net interest income, and a more favorable tax rate. Management also raised its guidance for the 2026 fiscal year, adjusting the operating income growth outlook from the bottom of the 5% to 7% range to the mid-point, and upgrading the net interest income forecast from broadly flat to low single-digit growth.

Goldman Sachs highlighted that second-quarter non-interest income reached US$2.83 billion, beating market expectations by 5%. This was supported by the sustained strength of the Wealth Solutions business and better-than-expected performance from Global Banking, which offset periods of market weakness and adverse debit valuation adjustments (DVA). Net interest income stood at US$2.87 billion, exceeding market expectations by 1% and showing a 1% quarter-on-quarter increase, benefiting from favorable day-count effects, continued loan and deposit growth, and portfolio mix. Overall operating income surpassed market expectations by 3%.

Credit impairment charges for the quarter were US$150 million, 37% lower than market expectations, with the annualized loan loss rate dropping to 20 basis points, indicating sustained good asset quality. On the cost side, operating expenses slightly underperformed expectations, but after excluding the release of provisions for Korea ELS, they were broadly in line. The "Fit for Growth" savings continued to offset the impacts of business growth and inflation. On an adjusted basis, the full-year cost guidance is approximately US$13.3 billion, about 1% below market expectations.