HSBC: Correction: A Pathway to 20% ROTE

Research evidence excerpt

HSBC: Correction: A Pathway to 20% ROTE

Idea

May 13, 2026 10:38 AM GMT

Morgan Stanley Europe S.E., Madrid Branch+MHSBC | Europe Alvaro Serrano

Equity Analyst

Correction: A Pathway to 20% Alvaro.Serrano@morganstanley.comMorgan Stanley Asia (Singapore) Pte.+ +44 20 7425-6942

Nick Lord

Equity AnalystROTE Nick.Lord@morganstanley.com +65 6834-6746

Aitong Li What’s Changed

Research Associate

HSBC (HSBA.L) From To Aitong.Li@morganstanley.com +65 6834-6295

Price Target 1,419p 1,463p

Morgan Stanley & Co. International plc+

Almario Sulaj

Research AssociateWe review HSBC's medium-term earnings power and conclude

Almario.Sulaj@morganstanley.com +44 20 7425-2049

that a combination of stronger loan growth, Wealth and room

to increase efficiency puts 20% ROTE in play medium term. HSBC (HSBA.L, HSBA LN)

However, a quick resolution to the Middle East conflict is Banks | United Kingdom

needed, and on 10.5x P/E 26E re-rating potential is more limited. StockIndustryRatingView Equal-weightAttractive

Price target 1,463p

Revenue momentum is picking up across our coverage. The AI-driven capex cycle Shr price, close (May 12, 2026) 1,319p

52-Week Range 1,411-847p

is keeping economies more resilient than expected, and driving a recovery in loan Mkt cap, curr (mn) £228,032

growth and strong capital markets activity. In the case of HSBC this is compounded Up/downside to price target (%) 11

Avg daily trading value (mn) £239

by an improvement in the outlook in China and the bottoming of HK CRE. Our base

Fiscal Year Ending 12/25 12/26e 12/27e 12/28e

case assumes the Middle East conflict slows down activity, but if the current

EPS (US$)** 1.55 1.72 1.87 2.08

momentum holds, we see upside to revenues above company guidance and Prior EPS (US$)** - - - -

consensus. EPS, basic (US$)* 1.21 1.64 1.89 2.09