China border reopening could be key 2023 driver as HSBC, Standard Chartered prepare to report annual results, analysts say
- HSBC and Standard Chartered are both expected to post sharp gains in the fourth quarter compared with the final quarter of 2021, according to consensus estimates
- Questions remain about the recovery of the Chinese commercial real estate sector, and more loan provisions may be necessary, analysts say
Investors will be closely watching for guidance on how the reopening of the border with mainland China could affect the outlook for Hong Kong’s financial sector as the city’s biggest banks, including HSBC and Standard Chartered, unveil their annual report cards beginning this week.
Standard Chartered is expected to report a pre-tax profit of US$571 million in the fourth quarter, according to consensus analyst forecasts compiled by the London-based banking group. The lender reported a pre-tax loss of US$208 million a year earlier, with the prior-year quarter including US$285 in restructuring costs and a US$295 million impairment related to its investment in China Bohai Bank.
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Travellers praise restriction-free movement as last closed Hong Kong-mainland China borders reopen
“Following China’s border reopening, both inbound and outbound travel has picked up from low levels, yet is still well below the 2019 level,” Citi analyst Yafei Tian said in a research note last week. “As cross-border activities recover in 2023, Hong Kong banks’ credit card fees would likely improve. There could be around 40 per cent upside in credit card fees for domestic Hong Kong banks should credit card fees return to peak levels of 2018. In addition, growth in wealth management fees could pick up as investor sentiment improves.”