Zhi Tong Cai Jing·2026-02-27 02:57Core Viewpoint - The report from Industrial Securities upgrades HSBC Holdings (00005) rating to "Buy," forecasting a net interest income of at least $45 billion for the banking business in 2026, with an average tangible equity return of no less than 17% from 2026 to 2028 [1] Group 1: Financial Performance - In 2025, the company's reported pre-tax profit decreased by $2.4 billion to $29.9 billion compared to 2024, while the post-tax profit was $23.1 billion, down $1.9 billion from 2024. Excluding notable items at fixed exchange rates, the pre-tax profit increased by $2.4 billion to $36.6 billion [1] - The net interest income for 2025 was $34.8 billion, an increase of $2.1 billion from 2024, with a net interest margin of 1.59%, up 3 basis points year-on-year [2] - In Q4 2025, the company's revenue grew by 42% to $16.4 billion, driven by growth in net interest income and wealth management fees, while expected credit losses decreased by $0.5 billion to $0.9 billion [3] Group 2: Capital and Risk Management - The expected credit loss (ECL) for 2025 is projected at $3.9 billion, an increase of $0.4 billion from 2024, with ECL representing 39 basis points of the average loan portfolio [2] - The company's common equity tier 1 capital ratio for 2025 is 14.9%, and the average tangible equity return, excluding notable items, is 17.2%, an increase of 1.6 percentage points from 2024 [2] - The company plans to maintain a common equity tier 1 capital ratio between 14% and 14.5% in the medium term, with a projected net impact of 110 basis points from the privatization of Hang Seng Bank on common equity and capital by January 2026 [1]