Redburn has trimmed its rating on the HSBC Holdings (LON:HSBA), calling into question the group’s plans to generate multi-year revenue growth with less capital, WebFG News reports. The news comes after earlier this week, it emerged that the lender was close to launching a new digital bank.
HSBC’s share price has fallen deep into the red in today’s session, having given up 0.83 percent to 654.90p as of 11:36 BST. The stock is underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.49 percent lower at 7,282.81 points.
Redburn trims stance on HSBC
Redburn trimmed its rating on HSBC to ‘sell’ today, without specifying a price target. WebFG news quoted the analysts as commenting that with capital requirements tying management’s hands, the Asia-focused lender planned to generate revenue growth while using less capital, and forecast that its revenue to risk-weighted asset margin will reach an unprecedented seven percent by 2020.
The broker further reckons that while higher interest in the US are a good way to achieve capital-efficient revenue growth, quantitative tightening in the States would impact HSBC through a completely different channel as well, via Hong Kong.
“An enforced tightening on an indebted private sector is a dangerous mix for Hong Kong,” Redburn said, adding that even in the best of circumstances, and when compared to its performance over the past two decades, the lender's expectations for revenues and risk-weighted-assets were ‘unprecedented’.
Other analysts on Asia-focused lender
Citigroup meanwhile reaffirmed Europe’s biggest bank as a ‘buy’ yesterday, without specifying a price target on the shares, while JPMorgan Chase & Co, which sees the company as a ‘neutral,’ set a valuation of 780p on the stock earlier in the week. According to MarketBeat, HSBC currently has a consensus ‘hold’ rating and an average price target of 764.89p.