StanChart 1Q24 Preview: All Eyes On HK Corporate After HSBC Results

Standard Chartered (STANLN: A3/BBB+/A) results are due 2-May, HSBC yesterday wasn’t a great indicator but this has been a strong spread performer YTD (ahead of €IG peers), even as the equity has lagged.

• Results last time (23-Feb) showed better credit metrics with lower non-performers and, with Chinese CRE fears abounding, this was viewed positively and the equity was up 14% in the week following. Since then, news has focused on internal restructuring and mgmt departures (below c-suite level), alongside incremental news-watching from China.
• HSBC’s results (30-Apr) did show a jump in HK corporate non-performers, so that’s a poor lead in to tomrrow’s results but, at least at HSBC, loan losses were better than expected.
• Spreads on its EUR debt have performed well YTD (-48bp, €IG banks -38bp) whereas the equity has lagged the peer group by over 10pp (+4.8% YTD, SX7P +15.9%).
• Since 4Q23 results, EPS estimates have broadly held steady with revenue expectations trimmed slightly – which itself is indicative of the bank’s internal cost restructuring focus.