HSBC HOLDINGS (0005.HK): Short-term volatility does not alter the long-term trend, with valuation upside emerging

HSBC's 3Q26 revenue and profit were slightly below expectations, mainly due to the high base from one-off insurance income and short-term headwinds such as the shift toward time deposits. Further pressure should be limited and will not affect the company's core businesses or earnings trend, and its medium- to long-term financial guidance remains unchanged. As the Fed raises rates, a higher-for-longer interest-rate environment within a favorable range remains a long-term positive for net interest income, while underlying trends in wealth management and transaction banking remain intact, with new business volumes and fund balances continuing to grow strongly. 3Q26 operating revenue was USD18.68bn, up 4.4% YoY, with banking book net interest income of USD11.656bn, up 5.5% YoY, and a net interest margin of 1.57%, down 5bps QoQ on a higher share of time deposits in Hong Kong. Non-interest income was USD7.02bn, up 2.5% YoY. Pre-tax profit was USD10.021bn, up 10.1% YoY, and net profit attribu