According to the report released by Daiwa, after the Federal Reserve cut interest rates by 50 basis points, HSBC announced a reduction of 25 basis points in the prime rate and savings deposit rate. Other banks have followed suit. This is in line with the bank's view that the decline in prime rates and savings rates will be half the speed of the Federal Reserve's interest rate cut.

The bank assumes that the United States will cut interest rates by approximately 150 basis points by the end of next year. In the environment of declining interest rates, the key for Hong Kong banks lies in the growth of better loan or fee income, decreased credit risk, cost control, and to what extent can capital risk help offset the pressure on the return on equity (RoE).

The bank pointed out that if the RoE can continue to remain close to Daiwa's predicted level, the total shareholder returns (TSR) of these banks should be able to maintain a double-digit level. The bank believes that HSBC (00005.HK) and Standard Chartered (02888.HK) are positioned more favorably compared to Hang Seng Bank (00011.HK) and Bank of China Hong Kong (02388.HK).