According to a report by CITIC Securities, it maintains its bullish outlook on HSBC Holdings (00005.HK) in the 6 to 12 month timeframe, mainly due to its steady performance and high shareholder returns in an environment where interest rates are expected to remain high for a longer period of time, and the company's current valuation is still not high. In the short term, it believes that Standard Chartered Group (02888.HK) may have stronger positive support as the bank is expected to have a strong Q2 performance, mainly due to maintaining growth momentum in its income sector.

Locally, CITIC points out that there is still economic and internal pressure on real estate exposure. Against the background of the delayed interest rate cut by the Federal Reserve, it believes that the Hong Kong economy will still face pressure, as recent macro data has not shown a clear improvement trend. Therefore, it maintains the view that international banks are better than local banks.

The report mentions that the current judgment of European and American central banks on inflation prospects and guidance on interest rate cuts are relatively cautious, believing that even if a rate cut cycle is initiated, the central interest rate may still be higher than the pre-pandemic level, and high interest rates may become the new normal.

The bank believes that the impact of the "hawkish rate cut" by the European and American central banks on HK bank profitability is controllable. According to market forecasts, the average interest rate level of the US dollar, GBP, and EUR this year is expected to decrease by 14, 19, and 44 basis points respectively compared to the end of last year, and further decrease by 91, 112, and 106 basis points next year. Under this scenario, the bank estimates that it will drag down HSBC and StanChart's pre-tax profits by 1.8% and 1.9% this year, and 9.7% and 12.3% next year, respectively.

However, considering that the interest rate cut is conducive to the recovery of credit demand, improvement of deposit structure, and growth of non-interest income, the downward pressure on interest income is expected to be offset to a certain extent. The bank expects that from 2024 to 2025, the ROTE of HSBC Holdings will remain at 14% to 15% after adjustment, and the adjusted ROTE of Standard Chartered will remain at 11% to 12%.