Ge Long Hui·2025-10-30 21:14Core Viewpoint - HSBC Holdings reported better-than-expected performance for Q3 2025, driven by higher net interest income and wealth management revenue, with adjusted revenue of $17.9 billion, a 4% year-on-year increase, and a baseline net profit of $6.2 billion, up 1% year-on-year [1] Financial Performance - The main reason for the better-than-expected performance was the net interest income, which increased by 3% quarter-on-quarter and 2% year-on-year, supported by rapid deposit growth [1] - Average interest-earning assets grew by 6% year-on-year, contributing to the increase in net interest income [1] - The banking net interest margin rose by 2 basis points to 1.98%, attributed to a rebound in HIBOR since early August [1] Future Outlook - Net interest income is influenced by multiple factors, including the rapid rebound of HIBOR from below 1% to around 3.5% since August, and a year-on-year deposit growth of 5% [2] - The proportion of CASA deposits increased to 64% in Q3 2025, up 3 percentage points from Q1 2025 [2] - The company raised its 2025 Banking NII guidance from approximately $42 billion to $43 billion or better [1] Earnings Forecast and Valuation - The company adjusted its 2025E revenue forecast down by 1.3% to $67.2 billion and net profit forecast down by 3.7% to $21.1 billion due to slowing non-interest income growth [2] - For 2026E, the revenue forecast was raised by 4.0% to $71.7 billion, and net profit forecast was increased by 11.2% to $27.1 billion, reflecting resilience in net interest margin [2] - The company is trading at 1.4x/1.3x 2025E/2026E P/B, maintaining a target price of HKD 111.9, indicating a 5% upside potential and a rating of outperforming the industry [2]