Broker snap: RBS downgrades HSBC to hold

2nd Aug 2011 11:30

RBS has downgraded its rating on global banking giant HSBC from buy to hold, due to uncertain economic conditions in the US and Europe.The lender revealed its first half results on Monday which came in slightly better than RBS's forecasts, "notably due to the $0.9bn sequential uplift in [second quarter] underlying revenues.""However, the prospect of slowing economic growth in the US and Europe delays the all-critical gradual rise in US policy rates required to drive a re-rating," RBS said.The broker notes that 64% of HSBC's customer loan book is generated in Europe and the US, as well as 55% of risk-weighted assets and 52% of underlying group revenues.After cutting its 2012 and 2013 earnings per share estimates by 4% and 14%, respectively, RBS lowers its target price from 750p to 640p.Nevertheless, shares in HSBC were trading 1.71% higher at 617.90p at 11:38.BC