JPMorgan has released a report indicating that STANCHART's (02888) share price may face near-term pressure. This is attributed to the bank's exposure in the United Arab Emirates, which accounted for 2.4% of its total assets and 5.6% of its revenue last year. These figures are higher than the corresponding exposures of HSBC's Middle East business, which were 2% and 3.8% respectively. The escalation of geopolitical risks is expected to negatively impact market sentiment. Despite this near-term headwind, JPMorgan maintains a constructive outlook on STANCHART's medium to long-term prospects.
The firm has reaffirmed its "Overweight" rating on STANCHART and has slightly increased its target price from HK$265 to HK$270. Following the release of STANCHART's fourth-quarter 2025 results, JPMorgan hosted a non-deal roadshow in Hong Kong. During the event, STANCHART's management emphasized the structural and cyclical factors supporting its deposit, wealth management, and flow-based asset management revenues.
JPMorgan has raised its forecasts for STANCHART's reported earnings per share and return on tangible equity for the years 2026 through 2028. Key future catalysts identified include the anticipated announcement of a stablecoin license in Hong Kong this March, and STANCHART's upcoming Investor Day in May. The company is expected to outline new medium-term targets for total returns and return on tangible equity at the event.
JPMorgan believes STANCHART is undervalued relative to its sector peers and emerging market counterparts. Trading at 1.2 times its projected 2027 tangible net asset value, the bank is seen as having significant earnings growth potential. This potential is supported by structural growth drivers and a relatively high capital return profile.
The report details that JPMorgan has increased its earnings per share forecasts for STANCHART for 2026, 2027, and 2028 by 5%, 2%, and 2% respectively, citing increased revenue support. Revenue is projected to achieve a compound annual growth rate of 5% between 2025 and 2028. Dividend forecasts remain largely unchanged, with the dividend payout ratio expected to hold steady at 35%, supplemented by an annual share buyback of $2 billion. This combination is anticipated to result in a total distribution ratio of 70%, yielding an annual total shareholder return estimated between 7% and 8%.