China Stimulus Sets Tone for Major Banks, HSBC Is All About Overhaul

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(Bloomberg) — China’s recent stimulus measures to revive the economy will set the tone for third-quarter earnings from major Chinese lenders including Industrial and Commercial Bank of China Ltd., China Construction Bank Ltd., Agricultural Bank of China Ltd. and Bank of China. China Limited.

Attention will be focused on their long-term prospects after lending rates and deposit rates were lowered following the central bank’s monetary easing. This is as net interest margins in the sector fell to record lows at the end of June, putting pressure on profits.

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The impact of the cycle of interest rate cuts on bank deposits that began in September 2022 should become clearer this quarter, said Francis Chan of Bloomberg Intelligence.

Home prices in China also continued to decline as investors continued to feel frustrated with recent policy measures to stabilize the real estate sector. China Vanke’s liquidity remains under pressure, as measures implemented since September may not lead to a sustainable rebound in new home sales, BI’s Christy Hong and Monica Si said.

Investors will want to hear more from new HSBC Holdings Plc CEO George Al-Hadiri about his cost-cutting plans. He has already indicated that the roles of senior managers are likely to be eliminated. Standard Chartered Plc may also provide an update on its $5 billion capital return plan.

The most important points to pay attention to:

Saturday: ICICI Bank (ICICIBC IN) margin compression should lead to a slowdown in net income growth. However, analysts at Nomura expect ICICI Bank to perform better than its peers as it faces less pressure for deposit-led growth. It has one of the lowest loan-to-deposit ratios among large private sector banks, giving it more room for loan growth.

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TUESDAY: HSBC Bank’s (HSBA LN) third-quarter pre-tax earnings may not have changed much from a year earlier, although all attention will be on Al Hudayri’s overhaul of the lender to save money. The lender has just appointed Pam Corr as CFO. Analysts at Morgan Stanley said HSBC is likely to announce another $3 billion buyback.

Wednesday: Standard Chartered Bank’s (STAN LN) net interest income in the third quarter will likely rise by 27% after several quarters of declines, estimates show. Credit growth prospects, especially in the corporate sector, will be examined as lower interest rates pressure margins, BI said. Management may say revenue guidance in 2025 and 2026 is achievable even in a slightly lower rate environment, according to Morgan Stanley.

• Chinese banks, including ICBC (HK 1,398), CCB (HK 939), AgBank (HK 1,288) and Bank of China (HK 3,988) may see loan yields fall by more than 50 basis points next year, as they suffer from interest rate cuts. basic loans this year. He told me.
• The decline in contract sales for China Vanke (2202 HK) may have brought more liquidity pressures in the third quarter, BI said. The continued decline in home sales could extend the decline in developer revenue and gross profit margin into 2026, BI added.
• BYD’s net income (HK1,211) in the third quarter is likely to rise thanks to record new electric vehicle sales, BI said. Higher EU tariffs may impact exports, through stronger domestic demand growth with government support to encourage replacement of older vehicles.
• Estimates show that GoTo (GOTO IJ) is expected to post a lower net loss in the third quarter, supported by higher contributions from on-demand fintech services. GoTo’s sale of three-quarters of its e-commerce business to ByteDance Ltd.’s TikTok, BI said. It may ease significant pressure on its earnings, but it could lose a significant amount of potential revenue.
• Midea Group’s (000333 CH) sales in the third quarter may have risen 7.4%, as China’s ongoing home appliance trading program likely stimulated demand for energy-efficient equipment, BI said.

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Friday: Nomura’s net income (8,604 JP) likely rose in the second quarter. Its credit earnings and ratings may improve further with better earnings consistency, BI said. Watch for any commentary on the fallout from the market manipulation scandal, which prompted some of Japan’s largest financial institutions to stop trading securities with the company, according to people familiar with the matter.

• Macquarie Group’s (MQG AU) adjusted net income for the first half could rise by about 15%, based on two estimates. The company’s business conditions improved as trading profits rebounded in the first quarter, BI said, adding that its price-to-earnings ratio of 21 beats its five-year average of 14.5.
• Advanced Info (ADVANC TB)’s third-quarter earnings could rise thanks to increased overall revenue contributions from its core services segment, which includes mobile and fixed broadband services. Bualuang Securities expects expenses to rise in the second half of the year due to increased marketing spending.

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