HSBC Holdings PLC (00005) reported a third-quarter underlying pre-tax profit of $10.3 billion, surpassing market consensus but aligning with Goldman Sachs' expectations. Non-net interest income exceeded forecasts, costs met projections, and provisions were slightly below estimates.

Goldman Sachs has raised its target price for HSBC London-listed shares from 1,752 pence to 1,860 pence, and for Hong Kong-listed shares from HKD 181 to HKD 193, primarily reflecting changes in earnings forecasts. The investment bank maintains a "Buy" rating on the stock.

While investors focus on operating expense outlook, Goldman Sachs views management's messaging as constructive. The bank's leadership reiterated that incremental operating expenditure will depend on a stronger operating environment while maintaining discipline on day-to-day banking costs. Against a backdrop of favorable interest rates, sustained fee income momentum, and broadly stable asset quality, the firm believes earnings prospects remain supportive through the second half of 2026.

For 2027, Goldman Sachs assumes a 5% increase in underlying costs, partially offset by approximately $500 million in simplification savings, resulting in upgrades to underlying pre-tax profit forecasts by 0.5% to 2% for the 2026-2029 period. The bank also forecasts $1.5 billion in share buybacks in the third quarter of 2026 and $2 billion in the fourth quarter.