HSBC & StanChart: Thoughts into 3Q: Momentum continuing, higher rates supportive but limiting HSBC's buyback

Ahead of 3Q results, we update our forecasts reflecting a higher rate environment, in line with our JPM Economist's views, with US rates peaking at 4.25% by year end. For HSBC, we increase EPS by 1% FY27E with no change in other years, given the Group's lower gearing to rates following increased hedging in 1H, and continue to see management potentially raising FY26E Banking NII guidance to c$47bn (vs JPMe $46.9bn in line with cons), while compromising on buybacks at $1bn given negative FVOCI movements. For StanChart, we make limited changes to EPS with slightly higher NII offset by higher costs, with annual positive operating leverage driving CIR to 56.7% FY26E. We expect an upgrade to total income guidance growth to c7% FY26E (i.e. the top end of the Group's 5-7% range), supported by strong momentum in Wealth and Markets, with a higher associated cost base of $13.4bn. Importantly, both banks have noted no observable impact on client flows or new client acquisition from China's tighten