On an adjusted basis—at constant exchange rates and excluding non-recurring items—HSBC Holdings has reported 3Q26 revenue growth of 4.53% YoY and pre-tax profit growth of 10.05% YoY. For 9M26, revenue and profit before tax rose 5.24% and 7.20% YoY, respectively, with growth slowing by 0.35pp and accelerating by 1.35pp versus 1H26. Annualized adjusted return on tangible equity (ROTE) was 18.8% in 9M26, up 1.1pp YoY. The board declared a third dividend for 2026 of USD0.10 per ordinary share. HSBC also plans to launch a further share buyback of up to USD1bn, expected to be completed before its annual results announcement. Key takeaways include: 1) continued acceleration in loan growth in the UK and Hong Kong, 2) modest pressure on net interest margin, 3) slower wealth management revenue growth, and 4) improving asset quality. With the organizational restructuring improving operating efficiency, we maintain BUY. HSBC is on our Huatai Conviction BUY list.
With accelerating loan growth supporting earnings improvement, we forecast 2026/2027/2028 attributable NP of USD26.06bn/29.05bn/31.67bn (previously USD23.98bn/26.44bn/28.29bn). We forecast 2027E BVPS of USD13.02 (previously USD12.03 for 2026E), with the shares trading at 1.41x/1.31x/1.22x 2026/2027/2028E PB, respectively. Listed banking peers trade at an average of 0.88x 2027E PB on Wind consensus (previously 1.08x for 2026E). We think that HSBC’s strategic positioning and organizational restructuring are well aligned with developments in Hong Kong’s capital markets. However, European economic conditions amid high interest rates could exert pressure on the bank. We apply a target multiple of 1.80x 2027E PB, deriving our target price of HKD183.86 (USD/HKD exchange rate of 7.845; previously HKD183.91, based on a target multiple of 1.95x 2026E PB), and maintain BUY. HSBC is on our Huatai Conviction BUY list.