BofA Merrill Lynch trimmed its target price for HSBC (ADR: HBC, Hong Kong Stock Code 00005) to HK$76 from HK$79, and maintained its “underperform” call. Following HSBC’s complicated set of 2012 results, the research house trimmed its “clean” 2013-14 EPS estimates by -3% & -4% respectively, reflecting slower revenue growth, incrementally higher underlying costs and a lower contribution from the group’s JVs & associates. These offset the modest deduction in credit costs due to improving trends in Nth America & LatAm. BofAML believes HSBC has made good progress in reshaping its business, achieving US$2bn of cost saves (US$3.5bn annualised). Despite these improvements, costs in 4Q2012 are still higher than 1Q2011 and the house said it struggles to see HSBC hitting its targeted 12-15% RoE range over the forecast period. While the capital picture now looks robust, the stock’s valuation uncompelling relative to global peers, it added.

Deutsche Bank said HSBC’s FY2012 results were largely in line. The research house kept its forecasts unchanged. It doesn’t think the stock expensive at 10.1x 2013 EPS with a 5% dividend yield. DB retained its “buy” call on HSBC, with a higher target price of 760p (HK$89.18) from 715p (HK$83.9) previously. It said HSBC’s 46 business sales or exits since 2011 have helped take the full Basel 3 core tier 1 to 9% at FY2012, 9.8% including the 1Q2013 completion of the Industrial Bank and Ping An (02318) transactions and 10.3% pro-forma for mitigation of immaterial holdings deductions HSBC expects to complete this year. DB have FY2013 and FY2014 full B3 CT1 at 11.4% and 12.5% without including further disposals which may take place. With 13% of group RWAs in run-off and modest loan growth it expects management to work hard to demonstrate the organic underlying growth and further cost cutting potential, both of which are positive.