CITIC Securities released a research report stating that HSBC Holdings (00005) demonstrates clear advantages with its high ROTE and dividend yield, offering significant allocation value. The bank forecasts revenue growth (excluding major items) of 2.3%, 2.4%, and 3.4% for 2025-2027, with net profit attributable to shareholders growing at 6.3%, 2.2%, and 2.7%, respectively. The current valuation stands at 1.4x 2025 P/B and 1.5x 2025 P/TB, with a target valuation of 1.6x 2025 P/B (1.7x P/TB), corresponding to a target price of HK$120. The report maintains a Buy rating and lists HSBC as the top pick in the banking sector.
HSBC's Q3 2025 revenue and profits continued to exceed expectations. The company has raised its 2025 ROTE guidance to mid-teens or higher, with expectations that ROTE could surpass 15% in 2025. Specifically, net interest margin (NIM) stabilized and rebounded quarter-on-quarter due to optimized liability costs and structural hedging. With volume growth and stable pricing, HSBC has adopted a more optimistic outlook for Q4 2025 net interest income, subsequently raising its full-year banking book net interest income guidance to $43 billion.
Non-interest income remained robust, with wealth management business surging 30% YoY, significantly exceeding expectations. Inflows from new customer segments repeatedly hit record highs, demonstrating strong momentum. Transaction banking saw steady growth as trade-related client activity normalized, though reduced FX market volatility in Q3 slightly weighed on non-interest income.
While Hong Kong’s commercial real estate asset quality faces pressure, exposure remains limited, keeping risks relatively manageable. Credit costs stayed stable at 40 bps. Overall, HSBC’s fundamentals remain solid, supported by resilient net interest income, sustained high non-interest income growth, and effective cost control, enabling mid-teens ROTE sustainability through cycles.
Long-term, a terminal policy rate of 3% suggests ample room for loan pricing and investment returns, robust credit demand, thriving corporate activity, and improved asset quality—positioning HSBC as a leading global bank in an ideal operating environment. Additionally, the trend of Chinese enterprises expanding overseas and global supply chain restructuring is accelerating rather than weakening due to U.S. tariff policies. In the increasingly fragmented Globalization 2.0 era, HSBC’s extensive regional presence makes it a core beneficiary of international supply chain realignment, while also capitalizing on the trend of Asian affluent retail clients diversifying assets globally.