UK International Banks: Trends are friends but valuation matters too; Downgrade StanChart to Neutral

Research evidence excerpt

UK International Banks: Trends are friends but valuation matters too; Downgrade StanChart to Neutral

Global Research

23 July 2026ab

UK International Banks Equities

United KingdomTrends are friends but valuation matters too;

Downgrade StanChart to Neutral Banks

Jason Napier, CFA

Analyst

jason.napier@ubs.com

Strong performances in 2026, up with events in our view, StanChart to Neutral +44-20-7568 5037

In 2026 HSBC has delivered a 35% total return, lagging only Raiffeisen, Bawag, Sanjena Dadawala

BMPS, ING Poland and BNP, with StanChart strong at 21%, re-rating substantially. Analyst

While we expect 2Q results to show good momentum with i) market-linked revenues in sanjena.dadawala@ubs.com

good shape, ii) banking NII modestly ahead of guidance, and iii) capital building, into the +44-20-7567 0753

print our HSBC forecasts are broadly unchanged and StanChart numbers fall 2-3% on Helen Li, CFA

a disappointing 57% FY28 cost/income target from the HK CMD. We think both shares Analyst

are now up with events, trading at 2.1x and 1.6x FY26E TNAV for FY28 targets of >17% helen-za.li@ubs.com

and >15% at HSBC and SC, downgrading SC to Neutral from Buy. While some global +852-2971 6066

banks now trade at much lower implied CoEs and we think both firms offer better-than-

average long term growth, guided near term revenue growth is in line with the sector

and uncertainty around the Hong Kong wealth now higher; see within.

Trends are friends...

We think the HSBC and StanChart narrative has been transformed by i) higher rates

(UBSe HSBC's banking NII +44% or $14bn FY26E vs FY22), ii) expansion in Wealth to

~25% of revenues, iii) portfolio management (business sales and purchases), and

iv) improved communications. More favourable yield curves and equities markets and