Analysts at Goldman Sachs have updated their outlook on Standard Chartered PLC (SEHK: 02888), increasing the 12-month target price for its Hong Kong shares from HK$242 to HK$267 while reiterating a "Buy" recommendation.

The investment bank has raised its target price-to-earnings multiple from 10.25x to 11.5x, citing increased confidence in the management's strategic execution to achieve a return on tangible equity (ROTE) of approximately 18% by the fiscal year 2030.

Goldman Sachs has revised its forecasts ahead of the bank's second-quarter results, scheduled for release on July 29. The firm projects the group's post-tax profit (after AT1) for Q2 to reach around $1.6 billion, which is 5% above the current market consensus.

Revised Earnings Outlook

Furthermore, Goldman Sachs' earnings projections for Standard Chartered for the fiscal years 2026 to 2028 are 2% to 4% higher than market consensus. This more optimistic view is primarily driven by a constructive outlook on fee income growth and net interest income expansion. The firm also forecasts the statutory ROTE to reach 13.6% by 2026, surpassing the company's guidance of over 12%.

Second Quarter Performance Estimates

For the second quarter, Goldman Sachs estimates statutory operating income to be approximately $5.6 billion, representing a 2% year-on-year increase. This growth is partly attributed to a strong 4% year-on-year rise in Corporate & Investment Banking revenue.

Net interest income for Q2 is projected to be around $2.9 billion, exceeding market expectations by 2%. A slight sequential improvement is anticipated, supported by higher Hong Kong Interbank Offered Rates (HIBOR) during the quarter and a greater number of days in the period.

Asset Quality and Capital Returns

Regarding asset quality, the firm has revised its credit cost forecasts downward. It expects Q2 credit impairments of about $220 million, which is 11% below consensus estimates. The full-year credit cost ratio is forecast at 32 basis points, also lower than the market consensus.

In addition, Goldman Sachs anticipates that Standard Chartered will announce a new share buyback program of approximately $1 billion alongside its Q2 results. This would bring the total share repurchases for the 2026 fiscal year to around $2.5 billion.