HK Banks Monthly Sep-26: Slight share price outperformance amid materialization of Fed rate hikes

HK banks outperformed HSI/HSF by 7%/5% in September, likely reflecting the rising expectation of Fed rate hikes in the first half of the month, but such positive sentiment has partially faded in recent weeks amid rising concerns about the adverse impact of higher market yields. Operating trends showed mixed messages during the month, with continued improvement in loan growth momentum but concern about margin migration. 3Q26 operating performance in the coming weeks should be the key share price catalyst in the near term, and our preference order among large-cap banks is BOCHK>STAN>HSBC into 3Q26 results.