HSBC Holdings Plc will be one of the worst performers among European banks this year as waning growth in emerging markets more than doubles the bank's bad loans in Asia, according to analysts at JPMorgan Chase & Co.
HSBC's non-performing loans in the region, which accounts for about 39% of HSBC's lending, may jump to US$5.4 billion ($7.7 billion) by year-end from US$2.2 billion in June, analysts led by Raul Sinha wrote in a note on Wednesday, when downgrading the stock to underweight from neutral. In a tougher scenario, the lender's bad debts in the region could surge to US$15.3 billion, according to the note.
"With the rising probability of an emerging-market credit cycle likely to be priced into bank valuations, we expect HSBC to underperform relative to European banks," Sinha said. "Given Asia is the largest component of HSBC's emerging market exposure and that non-performing loans are rising, we believe that provisions are likely to pick up."
Cooling emerging economies from China to India along with an equity-market rout has prompted investors to withdraw money from the region and flee Asia-focused stocks. HSBC Chief Executive Officer Stuart Gulliver, 56, said in November while the region's market turmoil had not impacted credit quality so far, it delayed a planned redeployment of about US$150 billion of assets to Asia.
HSBC fell 3% to 507.1 pence at 12:26 p.m. in London, after losing 12% last year. That compares with JPMorgan's target price of 500 pence, down from 580 pence.
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
HSBC's non-performing loans in the region, which accounts for about 39% of HSBC's lending, may jump to US$5.4 billion ($7.7 billion) by year-end from US$2.2 billion in June, analysts led by Raul Sinha wrote in a note on Wednesday, when downgrading the stock to underweight from neutral. In a tougher scenario, the lender's bad debts in the region could surge to US$15.3 billion, according to the note.
"With the rising probability of an emerging-market credit cycle likely to be priced into bank valuations, we expect HSBC to underperform relative to European banks," Sinha said. "Given Asia is the largest component of HSBC's emerging market exposure and that non-performing loans are rising, we believe that provisions are likely to pick up."
Cooling emerging economies from China to India along with an equity-market rout has prompted investors to withdraw money from the region and flee Asia-focused stocks. HSBC Chief Executive Officer Stuart Gulliver, 56, said in November while the region's market turmoil had not impacted credit quality so far, it delayed a planned redeployment of about US$150 billion of assets to Asia.
HSBC fell 3% to 507.1 pence at 12:26 p.m. in London, after losing 12% last year. That compares with JPMorgan's target price of 500 pence, down from 580 pence.
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
0 comments:
Post a Comment