Zhi Tong Cai Jing·2026-01-07 03:17Core Viewpoint - DBS has a positive outlook on HSBC Holdings, projecting a return on equity of approximately 16% for the fiscal years 2026-2027, despite a decline from the high base of fiscal year 2025 [1] Group 1: Earnings Forecast - DBS has raised its earnings forecasts for HSBC for fiscal years 2026 and 2027 by 2% and 7% respectively [2] - The net interest income forecast for HSBC from fiscal years 2025 to 2027 has been increased to over $43 billion [2] - The anticipated dividend yields for 2025 to 2027 are 5.2 cents, 5.6 cents, and 6.3 cents respectively [2] Group 2: Revenue and Growth Drivers - The downward risk to net interest income for fiscal year 2026 is expected to be smaller than last year due to a reduced rate of interest cuts in the US and a recovery in Hong Kong interbank offered rates since the historical low in Q2 2025 [2] - Non-interest income is expected to maintain strong growth momentum, with a robust capital market anticipated in fiscal year 2026 [1] - Credit costs are expected to remain manageable, as there are no significant signs of deterioration in credit risk for commercial real estate in Hong Kong [1] Group 3: Stock Performance and Recommendations - DBS expects HSBC to restart its share buyback program later this year, with a total stock return projected to exceed 6% for fiscal year 2026 [1] - The target price for HSBC has been raised from HKD 113.7 to HKD 139.2, reflecting a forecasted price-to-book ratio of 1.47 times for fiscal year 2026 [1]