HSBC share price: Deutsche Bank sees lender as ‘hold’ ahead of results

Deutsche Bank has remained neutral on HSBC Holdings (LON:HSBA) ahead of the Asia-focused lender’s second-quarter results early next month. The analysts note that they do not expect material impact from the Brexit vote in last month’s referendum in the UK.

HSBC’s share price surged in yesterday’s session, closing 1.15 percent higher at 484.80p and outperforming the benchmark FTSE 100 index which closed in positive territory yesterday, adding 26.18 points to end the session 0.39 percent higher at 6,695.42. The group’s shares have lost some 16 percent of their value over the past year, and are down by nearly 10 percent in the year-to-date.
Deutsche Bank reiterated its ‘neutral’ rating on HSBC yesterday, while raising its price target on the stock from 470p to 480p to reflect currency movements and upside risks such as improvement in emerging markets outlook and lower-than-expected loan losses. The move comes ahead of the FTSE 100 bank’s results on August 3.

“We do not expect material impact from the “Brexit” vote on H1 performance given how late in the quarter this occurred, and that c.70 percent of HSBC’s exposure is non-UK,” the bank’s analyst David Lock said, as quoted by Citywire. The analyst, however, highlighted several areas to look out for in the Asia-focused lender’s results, namely revenue growth which has been weaker in recent quarters, cost control, and dividend sustainability.
“We think ‘Brexit’ and uncertainty has increased focus on sustainability of dividend given weaker business performance and lack of book value growth,” Lock pointed out.
Analysts at BNP Paribas reiterated their ‘neutral’ stance on HSBC last week, with a price target of 400p on the shares. Citigroup, which is bullish on Europe’s biggest bank with a ‘buy’ rating, meanwhile set a price target of 515p on the stock.
As of 07:58 BST, Tuesday, 19 July, HSBC Holdings plc share price is 484.80p.