HSBC Cut To Sell-Equivalent By Bernstein's Barua

On Monday, AB Bernstein issued a company note on HSBC Holdings plc

after disappointing Quarter 4 earnings results. Analysts at Bernstein downgraded HSBC to Underperform with a 380 pence price target. Chirantan Barua and Daniel Lasry, analysts at Bernstein, wrote, "HSBC's Q4 results (quite dreadful) are symptomatic of the macro headwinds that the Global Banking system faces this year – a lack of credit demand, a sharp drop in corporate activity and a low rate environment that can only get worse. In this environment, we find it impossible for the bank to sustain its progressive dividend policy and expect the bank to signal a cut anytime in the next 6 months." Analysts at Bernstein gave 2 key reasons why HSBC is struggling: 1. Growth Bernstein noted that HSBC has struggled to grow its Hong Kong loan book, with an expected decline of 4 percent. Furthermore, analysts believe that margins may decline 9 percent as the global economy weakens and competition with other financial service companies increases. 2. Efficiency: Bernstein believes that following the expenses miss in the fourth quarter, HSBC may continue to struggle to keep costs down and maintain operational efficiency, putting a further strain on margins. Currently, HSBC is trading at $32.03, down 0.45 percent.