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好過好多so called 分析員多多聲最重要，此分析係看整體，不是單單只強調一部分Citi Upgrades HSBC, Shrugging Off Subprime Fears08.02.07While investors around the globe have been trembling over the U.S.-driven credit crunch, Citigroup has upgraded HSBC to “buy,” discounting the subprime mortgage risk that has lately been troubling the first major banking group to have acknowledged the credit danger. In a report issued in Europe Wednesday, Citigroup (nyse: C - news - people ) upgraded its call on HSBC (nyse: HBC - news - people ) from "hold" to “buy” and also lifted its price target by 5% from 1,000 pence ($20.32) to 1,050 pence ($21.34). Citigroup said the subprime mortgage risk in the United States is becoming immaterial to HSBC. The securities house estimates that if the delinquency rate on HSBC Mortgage Services, the mortgage division, with a portfolio valued at $41 billion, were to surge 2.5 times from 6% to 15%, the expected loss to the bank would be $3.3 billion. "With existing reserves of $2.1 billion this would require additional provisions of $1.2 billion representing less than 5% of group profits, or less than 10% of Asia and Latin America combined," the bank’s report read.HSBC was the first banking group to reveal, in February this year, that it would pay a hefty price for having entered the U.S. subprime mortgage market--more than $10 billion in write-offs for bad loans. (See " House Falls On HSBC") Some five months after the event, Citigroup said investors’ attention might shift toward the upside. "We believe that this issue is now behind the company and that the market will start to focus on growth opportunities in emerging markets with profits from Asia and Latin America expected to grow 27% to $12.2 billion this year." Prompted by expected stronger revenue growth in Hong Kong, Citigroup raised its estimates of HSBC's earnings per share by 2% in 2008 and 4% in 2009, after the bank reported a forecast-beating result on Monday. HSBC surprised its investors by announcing 13% growth in half-year profits to $14.15 billion. Basic earnings per common share rose 22% to 95 cents from 78 cents in the first half of 2006, thanks to strong earnings from Asia and the investment banking division, which helped to offset the losses from the subprime market.The bank took a bad debt charge of $6.35 billion in the first six months, 63% higher than the previous year’s. (See " HSBC Weathers Subprime Storm") Nevertheless, HSBC expects no serious contagion from its subprime exposure. The company revealed that in the first six months of the year it had called 19,000 customers whom it deemed in danger of default. It offered to modify the accounts of about 5,000, holding about $700 million of mostly adjustable-rate loans, to enable them to continue repayments. The modifications could include rewriting the terms of the loan to reduce the rate or extending the reset date for a year. The stock rebounded 1.50 Hong Kong dollars (19 cents), or 1.1%, to 143.70 Hong Kong dollars ($18.42) in Thursday trading in Asia.
Citigroup likes HSBC now, but they also like the subprime investment a few years ago...