JPMorgan Backs HSBC, STANCHART Despite Potential 14% EPS Risk

Edgen Stock·Mar 18 2026, 03:59

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Key Takeaways

JPMorgan issued a bullish report on HSBC and Standard Chartered, advising investors that recent stock price drops present a buying opportunity. The bank believes downside risks from Middle East conflicts and private credit exposure have been fully reflected in current valuations.

Bullish Call: JPMorgan assigned an "Overweight" rating to both HSBC and Standard Chartered, raising HSBC's price target to HKD180.
Priced-In Risk: The bank's stress test projects a potential 10% EPS decline for HSBC and a 14% drop for STANCHART by 2026, which it considers already factored into their stock prices.
Resilient Returns: Even under these adverse scenarios, JPMorgan projects a total return of around 7%, maintaining a positive medium- to long-term investment outlook.

JPMorgan Recommends Buying Banks Despite Potential 14% EPS Hit

JPMorgan has issued "Overweight" ratings for HSBC Holdings and Standard Chartered, signaling a buying opportunity after recent stock price corrections. The investment bank argues that investor concerns over Middle East conflicts and private credit exposure are already factored into the shares. Reflecting this confidence, JPMorgan raised its price target for HSBC to HKD180 from HKD165, while keeping Standard Chartered's target at HKD270.

Stress Test Models 184bp Drop in Tangible Equity Returns

JPMorgan's analysis modeled a downside scenario to quantify potential financial impacts. The forecast shows a potential 10% decline in HSBC's earnings per share (EPS) and a 180 basis point drop in its return on tangible equity by 2026. Standard Chartered, noted as more sensitive to Middle East turmoil, could see its EPS decrease by 14% and its return on tangible equity fall by 184 basis points. The model's assumptions include an incremental credit cost of 5 basis points and a 10% loss rate on Middle East risk exposure.

Outlook Projects 7% Total Return Even Under Pressure

Despite the modeled stress, JPMorgan asserts that the investment case for both banks remains solid. The report concludes that now is an "appropriate time to build positions" because the adverse scenarios are largely reflected in current valuations. The firm's medium- to long-term outlook is unchanged, forecasting an estimated total return of approximately 7% even if the stress case materializes, highlighting the perceived resilience of the stocks.