Higher interest rates to drive profits as HSBC, Standard Chartered prepare to report second-quarter results

Concerns remain about recovery of Chinese economy; provisions for commercial real-estate loans expected to be lower, analysts say

US Federal Reserve expected to raise rates again this week after June pause

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Pedestrians walk in front of a HSBC advertisement in Kwun Tong on July 8. Photo: Xiaomei Chen

Published: 2:00pm, 24 Jul 2023Updated: 6:08pm, 25 Jul 2023

Investors will be keeping a close eye on interest income gains as rates continue to tick higher and any strains from a sluggish Chinese economic recovery as Hong Kong’s biggest banks, including HSBC and Standard Chartered, unveil their second-quarter report cards beginning this week.

Standard Chartered will be the first of the city’s three currency-issuing banks to update investors on its first-quarter performance on Friday, followed by HSBC on August 1 and Bank of China (Hong Kong) later next month.

Hang Seng Bank, which is 62.14 per cent owned by HSBC, also will report its half-year results on August 1, with results from Bank of East Asia (BEA), Hong Kong’s largest independent and family-run lender, expected in late August.

“We see upsides to consensus earnings on better net interest income given Hibor strength in May and June,” Citi analyst Michael Zhang said in a research note on Wednesday. “Domestic Hong Kong banks’ fee income year-on-year growth is likely to remain muted amid weak market sentiment. While more China commercial real estate-related provisions are likely, credit cost could improve.”