HSBC upgrades Standard Chartered, cites optimism on revenue growth

It said margin stability and improving loan trends underpin its view. The company’s new 7%+ return on tangible equity 2023 target looks achievable, HSBC said, with upside thereafter.

It lifted its 2021 and 2022 earnings per share estimates by 5.5% and 8.4%, respectively.

HSBC noted that after a weak 2020, the stock is again one of the worst performers in its European banking universe in 2021 year-to-date, hurt by lower US rates, geopolitical tensions and better investment stories elsewhere. "But we’re getting more optimistic on the operational outlook," it said.

"First, the benefit of having a balance sheet geared to short rates is that most of the pain has now already been felt. And with time deposits continuing to flow into low-cost sight deposits, we see margins stabilising in 2021 with a rising trend from Q2-Q4 2021 likely.

"Secondly, the outlook for loan growth is improving; STAN stemmed its loss of market share in mortgages in Hong Kong in 2020, where mortgage applications have picked up in recent months. Likewise, in South Korea, STAN is seemingly taking share in a market where growth is accelerating."

At 1250 GMT, the shares were up 2.6% at 504.2p.