Bank of America Securities has reiterated its "Neutral" rating on Standard Chartered PLC (02888) while raising its target price from HK$209.8 to HK$227, following an upward revision of earnings forecasts.

The bank's new medium-term targets, announced at an investor day in May, include achieving a return on tangible equity (ROTE) above 15% by 2028, delivering a compound annual revenue growth rate of 5% to 7% from 2025 to 2028, and reducing its cost-to-income ratio to below 57% by 2028.

While the 2028 ROTE target is largely in line with market expectations, the report suggests there is potential for upside, particularly in revenue and impairment metrics. The growth trend in wealth management, driven by the ongoing diversification of asset allocation among Chinese residents, is viewed favorably. Additionally, the Corporate & Investment Banking (CIB) segment is seen as benefiting from structural trends such as the internationalization of the Renminbi and the overseas expansion of Chinese enterprises.

The report notes that management has provided confident guidance on costs, aiming to lower the cost-to-income ratio to approximately 57% by 2028, which would signify a significant improvement in cost efficiency.

However, regarding capital allocation, the new guidance implies that supporting growth may require more capital than previously anticipated. Consequently, the overall growth in return on equity could be slower, and the total cash return may be lower.