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HSBC and Lloyds Earnings Ahead: What to Expect

UK Banking giants HSBC Holdings (GB:HSBA) and Lloyds Banking (GB:LLOY) will report their Q4 and full-year results for 2022 in February. Analysts expect these banks to generate more income in 2022 and beyond as interest rates rise.

Both Lloyds and HSBC have strong earnings momentum and better control over costs. Analysts are bullish on the earnings and also expect a slight growth in dividends for shareholders.

Here, we have used the TipRanks Earnings Calendar for the UK market to list these stocks with upcoming earnings. This tool provides a list of companies and their up-to-date information about their earnings and can be filtered on various factors like sector, analyst rating, market cap, etc.

Let’s have a look at the details.

Lloyds Banking Group

Lloyds Bank is the largest financial institution in the UK, serving around 25 million customers with a focus on the UK markets.

Lloyds will report its Q4 and full-year earnings for the period ending December 31, 2022, on February 22. Analysts expect an EPS of 0.02p for the quarter, which is similar to the EPS for the same period last year.

In the first nine months of 2022, the bank posted a growth of 12% in its net interest income of £13 billion. For the full year, Lloyds expects its net interest margin to increase from 284 bps to more than 290 bps, resulting in higher income for the bank.

Ahead of the earnings, analyst Aman Rakkar from Barclays upgraded his rating on Lloyds’ stock from Hold to Buy. He also raised his target price from 55p to 75p, which now has an upside potential of 40%. He believes Lloyds is “relatively better placed” during the interest rate hikes by the central bank and the risk of deposit outflows at banks.

The bank has a better valuation with a P/E of 9.31 as compared to HSBC and Natwest Group (GB:NWG). This, along with strong earnings growth, will help the stock grow higher in 2023 and beyond.

Is Lloyds Bank a Good Stock to Buy?

Overall, Lloyds has a Moderate Buy rating based on seven recommendations on TipRanks. The average LLOY target price is 70p, which has an upside potential of 30.8%.

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HSBC Holdings Plc

HSBC is a UK-based multinational banking and financial services company. It has a presence in more than 60 countries worldwide.

Similar to Lloyds, analysts expect HSBC to also benefit from the rising interest rates. However, HSBC has the extra advantage of having greater exposure to Asian markets. The bank targets investing $6 billion by 2027 in Asia and expects to generate double-digit growth. This provides support for the stock price as it reduces the risk for investors.

HSBC will report its full-year earnings for 2022 on February 21. The consensus EPS forecast is 0.18p for Q4, up from 0.14p in the same quarter of 2021.

In its third quarter of 2022, HSBC posted a net interest income of $8.6 billion. For the full-year 2022, the bank expects net interest income of $32 billion and $36 billion, respectively. The bank expects a 50% dividend payout ratio for 2023 and 2024.

Citigroup and Bank of America Securities have reiterated their Buy rating before the earnings release. Ronit Ghose from Citigroup has a target price of 650.0p, suggesting an upside of 6.3%.

Rakkar from Barclays has the highest target price of 780.0p on the stock with an upside of 27.5%.

What Is the HSBC Stock Price Prediction?

HSBC stock has an average target price of 706.67p, which shows a change of 15.5% on the current trading price.

HSBC stock has a Moderate Buy rating on TipRanks, based on eight Buy and four Hold recommendations. The stock is trading up by 15.4% YTD.

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Conclusion

While analysts see some long-term risks for these banks, like higher deposit outflows, they remain bullish on the Q4 earnings expected this month. Analysts are bullish on the earnings and their stocks, based on higher interest income, decent dividend growth, and better financial health for these banks.

Disclosure

Kirti Tak
Kirti Tak is a post-graduate with a MBA degree from ICFAI Bangalore. She has around 5 years of experience in writing articles in financial domain. Before joining TipRanks, she was a freelance writer, writing about personal finance, deal analysis, stocks, and more. In her previous experience, she has worked on different projects including report writing and financial analysis at WNS Global Services. She also enjoyed writing stock analysis for the companies listed on NYSE, NASDAQ & LSE during her tenure at Fusion Outsourcing. She believes in keeping her articles simple and crisp. In her free time, she enjoys listening to music, doing some DIY art, and cooking.