CICC: Maintains an Outperform rating for STANCHART (02888) and raises the target price to HKD 254.58.

CICC has released a research report indicating that STANCHART (02888) has made significant business progress that exceeds market expectations. The revenue forecast for 2026 is generally maintained at $22.4 billion, while the 2027 revenue forecast is raised by 2.9% to $24 billion. The forecast for the net profit attributable to owners for 2026 remains unchanged at $5.1 billion, and the 2027 forecast is raised by 3.9% to $5.7 billion. The company's trading is at 1.4x/1.3x 2026E/2027E P/B. The bank has raised the target price by 6.7% to HKD 254.58, corresponding to 1.5x/1.4x 2026E/2027E P/B with a 10% upside potential, maintaining an outperform rating in the industry. CICCs main points are as follows: STANCHART's Q2 2026 performance is better than the banks expectations. In Q2 2026, the company's operating income increased by 3% year-on-year, exceeding market expectations by 3%. After excluding the high base effect from Solv's sale in the same period last year, the operating income grew by 8% year-on-year. The net profit attributable to owners remained roughly flat year-on-year, exceeding market expectations by 17%. The companys overall performance surpassed expectations, primarily driven by strong wealth management business performance and growth in net interest income. In Q2 2026, net interest income increased by 6% year-on-year, beating the consensus expectation by 1.1%: Net interest margin stabilizes In Q2 2026, the adjusted net interest margin slightly decreased by 2bps quarter-on-quarter to 2.03%, demonstrating strong operational resilience. Customer deposits increased by 2% quarter-on-quarter. Among these, the increase in WRB deposits mainly came from time deposits, while growth in CIB deposits primarily originated from transactional service CASA. The company continues to leverage its comprehensive service advantages by consistently optimizing deposit pricing to maintain a high-quality liability base. Stable growth in loan scale In Q2 2026, loans grew by 1.9% quarter-on-quarter and by 5.7% year-to-date in 2026; among these, new loans in CIB were mainly driven by global banking, accounting for 74.2% of new loans; new loans in WRB mainly came from wealth management and mortgages, accounting for 25.8% of new loans, primarily due to some new loans being offset by a decline in unsecured loans, leading to continued optimization of the loan structure. Risk warnings: escalation of regional conflicts, increased capital market volatility, and uncertainty in interest rate policies.