Credit Suisse stays at 'hold' on HSBC, now expects share buybacks

(Sharecast News) - Analysts at Credit Suisse stayed at 'hold' on shares of HSBC, noting the lender's outlook for interest rates and likelihood of share buybacks being announced soon.
The day before, the Asia-focused lender posted 41% better-than-expected net profits on the back of provision releases and a decline in restructuring costs.

Pre-provision profits however were 11% below consensus on an adjusted basis, partly due to slower Markets activity.

Yet customer loans and client balances "developed positively", they said, telling clients that it bode well for future revenues.

Credit Suisse now expected a $1.0bn share buyback would be announced alongside the lender's full-year numbers.

"We expect the final size of the buyback programme will be impacted by whether 3 or 4 bolt on acquisitions HSBC is looking at in Asia Wealth go ahead," the analysts added.

On interest rates meanwhile, HSBC management had noted how one-month HIBOR had "only" fallen by one basis point thus far during the quarter.

Management said that the outlook for central bank policy rate increases led by the Bank of England from the second half of 2022 had "improved.

As an aside, Credit Suisse pointed out HSBC's gearing to increases in short-term interest rates.

On the flip-side, "key downside risks are competitive dynamics in key markets, and geopolitical risks to which the stock has been sensitive to."

The analysts also stuck to their 465.0p target price.