HSBC’s ‘never had it so good’ say Barclays analysts
Barclays analysts have said HSBC “never had it so good” as they predicted further growth and upsides for the FTSE 100 lender.
Following the lender’s strong full-year performance, the analysts upgraded HSBC’s share price target by 28 per cent to 1,200p.
The lender pocketed a pre-tax profit of £25.6bn in 2024, up from £24bn in 2023.
The Barclays analysts said profit would come in ahead of company-compiled profit estimates for 2025, predicting a £24.6bn pre-tax profit.
They added net interest income was expected to grow despite the Bank of England slashing rates, with it set to benefit from volume growth and a boost in its structural hedge.
Analysts Aman Rakkar and Grace Dargan said HSBC’s updated strategy helped the firm deliver on a number of fronts.
They said the new plans will “likely see HSBC enter a new era for sustainable return on tangible equity.”
“The new strategy also protects against downside risks, such as faster rate cuts, and is the kind of thing we think investors will want to see from European Banks as the sector’s investment case evolves beyond simply higher rates,” Rakkar and Dargan added.
Cost-cutting central to new strategy
Europe’s biggest lender has undergone a structural overhaul since chief executive Georges Elhedery took the helm in September 2024.
The bank committed to an annualised decrease of £1.2bn in its cost base, expected by the end of 2026.
As part of its cost-cutting focus, HSBC axed numerous investment bankers, whilst giving some bonuses on the same day, Morning Wire revealed last month.
Rakkar and Dargan said cost control would be a “key driver” to improve returns on tangible equity.
“We look for broadly flat costs beyond 2025, better than around 3 per cent growth expected in the full-year 2026 consensus,” they added.
Rakkar and Dargan emphasised a strong earnings performance in Hong Kong had additionally underpinned heightened expectations on net interest income and growth in Wealth Management.