HSBC Earnings: Higher-for-Longer Interest Rates; Raising Fair Value Estimate

We lift our fair value estimate for HSBC to GBP 872 per share (HKD 84.80, $54.50 per ADR) from GBP 850 (HKD 80.00, $51.00) following first-quarter 2024 results that reflected solid noninterest income growth. Its net interest margin of 1.63% is also tracking our expectation comfortably, particularly with interest rates looking to stay high into second-half 2024. HSBC’s share price is reacting positively to the results as well as the announced ordinary dividend of $0.10 per share, a special dividend of $0.21 per share, and a share buyback of $3 billion for the second quarter. We remain buyers of HSBC.