HSBC, StanChart Earnings to Show Effects of Strategy Shifts
(Bloomberg) — The shock departure of Standard Chartered Plc’s finance chief and the fallout from HSBC Holdings Plc’s multibillion-dollar acquisition of bank stock will loom large in two earnings reports.
Standard Chartered investors were caught off guard by the resignation of Chief Financial Officer Diego De Giorgi, a potential successor to the senior position and a key figure behind the $1.5 billion cost-cutting programme. The bank’s shares have fallen more than 6% since his resignation.
At HSBC, analysts will be watching the impact of its acquisition of Hang Seng Bank Ltd. on earnings. HSBC purchased shares it did not already own at a valuation of $37 billion, a 30% premium to market capitalization. Chief Executive Officer Georges Elhedery said the deal would deliver greater shareholder value than buybacks. Morningstar analyst Kathy Chan expects revenue and cost savings to materialize gradually over the medium term.
Forecasts show that industrywide earnings growth for 2025 is expected to be driven by strong non-interest income as banks shift to asset management. Analysts at Citi said the normalization of HIBOR, the Hong Kong benchmark interbank interest rate, would also have a negative impact on quarterly earnings.
Important points to note:
Monday: No significant gains.
Tuesday: Forecasts show that while an increase in Standard Chartered’s (STAN LN) non-interest income should help it boost profits, a decline in net interest income is having a negative impact. Comments on the timeline for appointing a permanent CFO will be important after De Giorgi’s sudden departure. Morningstar’s Chan said the interim CFO should continue to implement its “Fit for Growth” restructuring program in the near term.
Wednesday: BI said HSBC (HSBA LN) management is likely to repeat its 2025 guidance of mid-teens or better return on tangible equity, 3% cost growth and a 14% to 14.5% CET1 ratio. The company is also preparing to reduce or eliminate bonuses for some bankers in a bid to rid the company of underperformers. It had previously cut 10 percent of its U.S.-based debt capital markets team, according to people familiar with the matter.
Thursday: More updates on Baidu’s (BIDU US) plans to spin off its AI chip unit in Hong Kong will be the main theme of its earnings call. Its autonomous driving business has gained solid momentum after its Apollo Go robotaxi unit received Dubai’s first driverless testing permit, according to Jefferies. Revenue is likely to decline by 4.3% in the fourth quarter due to reduced growth in the Baidu Core segment.
Friday: New World’s (HK17) debt woes and potential plans to become Blackstone Inc.’s largest shareholder, as reported by Bloomberg News, will likely lead earnings. BI says the developer is parent company Chow Tai Fook Enterprises Ltd. He said the developer was unlikely to go private after clarifying that the bids received by the company were unlikely to result in a public bid.
(Baidu’s earnings estimates are updated.)
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