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Higher interest rates to drive profits as HSBC, Standard Chartered prepare to report second-quarter results
- Concerns remain about recovery of Chinese economy; provisions for commercial real-estate loans expected to be lower, analysts say
- US Federal Reserve expected to raise rates again this week after June pause
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Chad Brayin London
Investors will be keeping a close eye on interest income gains as rates continue to tick higher and any strains from a sluggish Chinese economic recovery as Hong Kong’s biggest banks, including HSBC and Standard Chartered, unveil their second-quarter report cards beginning this week.
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Standard Chartered will be the first of the city’s three currency-issuing banks to update investors on its first-quarter performance on Friday, followed by HSBC on August 1 and Bank of China (Hong Kong) later next month.
Hang Seng Bank, which is 62.14 per cent owned by HSBC, also will report its half-year results on August 1, with results from Bank of East Asia (BEA), Hong Kong’s largest independent and family-run lender, expected in late August.
“We see upsides to consensus earnings on better net interest income given Hibor strength in May and June,” Citi analyst Michael Zhang said in a research note on Wednesday. “Domestic Hong Kong banks’ fee income year-on-year growth is likely to remain muted amid weak market sentiment. While more China commercial real estate-related provisions are likely, credit cost could improve.”
02:31
China’s youth unemployment rate hits new high as recovery falters
China’s youth unemployment rate hits new high as recovery falters
The one-month Hong Kong interbank offered rate, known as Hibor, hit its highest level since 2007 during June. Hibor represents the cost for banks to borrow from each other in Hong Kong dollars and is used as a reference for many mortgages in the city.
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