Morgan Stanley's research report pointed out that HSBC (00005.HK), Standard Chartered (02888.HK), and BOC Hong Kong (02388.HK) will announce their performance in October and November respectively. The outlook for the Net Interest Margin (NIM) for the 2025 fiscal year, as well as Standard Chartered's future capital return plan, will be crucial. Morgan Stanley also indicated a preference for international banks over local banks. Overall, Standard Chartered is currently Morgan Stanley's top choice.

The bank stated that lower quarterly average HIBOR and soft loan growth will lead to a subdued Net Interest Income (NII), expecting it to be the main impact of the interest rate decline in the 2025 fiscal year. The bank also mentioned that under the support of strong wealth and market income, non-interest income is expected to remain robust.

Morgan Stanley expects that bank costs will be well controlled and maintained within the expected range. If the capital markets income remains unchanged, performance-related compensation may be higher. The bank anticipates no unexpected credit losses, but non-performing loans in the Hong Kong commercial real estate sector may still rise.

Furthermore, Morgan Stanley expects HSBC to once again repurchase $3 billion worth of stocks; as for Standard Chartered, it may provide the latest information on its 2024-2026 $5 billion capital return plan, with the market's latest consensus expecting an amount exceeding $8 billion.

Considering the above factors, Morgan Stanley has revised the target price for HSBC (00005.HK) from HK$78.4 to HK$76.8, giving it a 'shareholding' rating. (js/k)

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