"Big Banks" Bank of America Securities: HSBC has multiple catalysts, reiterates as a top pick

Bank of America Securities research report indicates that HSBC Holdings (00005.HK) has recently completed the privatization of Hang Seng Bank, estimating a pre-tax total synergy effect of approximately USD 800 to 900 million, which includes cost and revenue synergies. Bank of America expects that 20% of Hang Seng's cost base has synergy potential, as Hang Seng's costs are already quite efficient and will continue to operate under its independent brand while retaining its own branch network.

At the same time, Bank of America sees room for revenue synergies, particularly in fee income from wealth management, wholesale, and transaction banking. Hang Seng's current revenue structure is more biased towards net interest income; based on its strong customer relationships, Bank of America believes there are significant cross-selling opportunities, which will further increase in importance as local business grows.

The bank stated that HSBC is one of its top picks this year, as it expects significant growth in Hong Kong's deposit business and Asian wealth management, with HSBC already having substantial competitive advantages in these areas, and management has committed to increasing investment in these fields; it now sets a target price of HKD 149.6 and a "Buy" rating