Shore Capital has placed its rating on HSBC under review, from sell, and said it expects to upgrade the shares to hold unless they bounce.
Analyst Gary Greenwood said the fall since the broker's 5 August "take profits" note, when it advised selling, has left the risk and reward more balanced. The shares are down 14% over that period.
Shore's target price is 1,335p, which it expects to stay broadly unchanged. The note was written when the shares stood at 1,365p, about 2% above target. They fell 7% to 1,269.6p in early trading, putting them about 5% below it.
Greenwood called the third quarter "mixed", with weaker income largely offset by lower credit costs. Adjusted pre-tax profit of $10.02bn was close to the $10.07bn consensus, though total income missed by 2%.
Impairments, the charges for loans that may go bad, were $832m. That was $218m, or 21%, better than forecast. The annualised ratio was 31 basis points, against full-year guidance of around 45.
Wholesale transaction banking fee income of $2.85bn beat expectations by 3%, and costs of $8.49bn were slightly below the $8.53bn consensus.
Banking net interest income of $11.66bn missed by 2%. Wealth fee income was 4% below consensus, which Greenwood called particularly disappointing as it had been a source of positive surprises.
Tangible net asset value per share of $9.41 was 1% light. The common equity tier 1 capital ratio, a measure of financial strength, of 13.9% missed by 20 basis points and sits just below management's 14.0% to 14.5% target range.
HSBC held all its guidance, including banking net interest income of at least $46bn for 2026 and a return on tangible equity of at least 17% through 2028. It also announced a further $1bn buy-back, as expected.
Greenwood sees limited implications for consensus forecasts, with softer income offset by better credit performance. The shares trade at about 1.9 times trailing tangible net asset value.
