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HSBC 1Q24 Preview: China And Buybacks

FINANCIALS

HSBC (HSBC: A3/A-/A+) results look set to be China and real estate focused (again) but there are expectations around an increased equity buyback.


  • HSBC has been associated with China, real estate and worsening asset quality but, last time around, results weren’t bad in these areas. Since then, Prudential’s results (20-Mar) indicated a weak Chinese outlook. Otherwise, the more hawkish backdrop to US rates could lead to some positive news on revenues but, conversely, falling HIBOR could consume elements of this positive.
  • The bank announced the sale of its Argentine business (small) on 9-Apr which shouldn’t alter capital expectations but some of the sell-side are looking for a buyback upgrade, here.
  • HSBC spreads are a c.31 tighter YTD, slightly weaker than €IG bank peers and its equity has been an underperformer (+5% YTD, SX7P +16%), largely on fears around China, asset quality and real estate, we feel.
  • Results last time around (21-Feb) missed on revenues vs. consensus but beat on loan losses. EPS estimates are down by 4-5% against revenue estimates broadly maintained this year and only trimmed 1-2% for next.

Results are due at 0500 (London time) with conf call at 0745 at http://bit.ly/3UALhy8

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