<匯港通訊> Citi says sterling depreciates once morest dollarHSBC (00005)take more risk thanStandard Chartered Group (02888)according to Citi estimates, foreign exchange risk affects HSBC’s common equity tier 1 capital adequacy ratio by regarding 15 basis points, and higher bond yields affect the other tier 1 capital adequacy ratio by regarding 50 basis points, while Standard Chartered’s income statement is almost statically affected by foreign exchange.
According to Citi, in 2021, the euro accounts for regarding 38% of HSBC’s total loan book, the UK alone accounts for 25%, the euro zone accounts for 40% of revenue and 24% of pre-tax profit. For Standard Chartered, the euro and the Americas accounted for regarding 21% of the total loan book, of which the US dollar was the mainstay. The euro and the Americas each accounted for 13% of Standard Chartered’s revenue and 17% of pre-tax profit.
At the same time, HSBC disclosed as early as the 2021 annual report that every 5% depreciation of the euro and sterling once morest the US dollar will reduce the share capital in 2021 by US$3 billion or 1.7%. According to the 2021 euro profit and loss statement, the foreign exchange depreciation by 5% will affect HSBC’s income by regarding 10%. 100 million yuan, the pre-tax profit will affect regarding 100 million US dollars or 0.5%. If the UK business is more profitable, the profit and loss statement will be more affected. In the third quarter of 2022 alone, the pound has depreciated once morest the US dollar by 13%. Citi estimates that the capital impact will be regarding 15 pips. Citigroup has a target price of 700 pence on HSBC UK. The rating remains “Buy”. (SY)
