Morgan Stanley has released a research report indicating that first-quarter earnings for banks in Asia are expected to be driven by higher non-net interest income. The firm anticipates that HIBOR will decline by approximately 66 basis points quarter-on-quarter, which will exert downward pressure on the net interest income of HSBC Holdings and Standard Chartered. However, this impact is projected to be offset by robust non-net interest income resulting from market volatility.

Morgan Stanley has made minor adjustments of less than 1% to the price targets for both HSBC and Standard Chartered, setting them at HK$149 and HK$195, respectively. Both banks maintain an "Overweight" rating. The firm expects investor seminars in May to serve as the next key catalyst for the two banks.

Due to geopolitical risks and macroeconomic uncertainties, Morgan Stanley anticipates that credit costs may be recognized earlier, potentially in the first quarter of this year. For HSBC, management is expected to book an additional provision of $250 million. Regarding capital returns, Morgan Stanley forecasts that HSBC will resume share buybacks in the second quarter, while Standard Chartered typically announces buybacks alongside its half-year and full-year results.

Looking ahead, Morgan Stanley believes uncertainties will persist. As the timing of expected interest rate cuts this year has been pushed back by one quarter, the firm has raised its net interest income forecasts for both banks for the current year. However, the level of capital markets activity for the remainder of the year remains uncertain.