Nomura has retained its 'buy' rating and 900p target price for global banking giant HSBC after its full-year results earlier this week, highlighting the company's strong cost-control momentum, improving revenue outlook and strong capital position.

The bank's core tier-one (CT1) capital ratio (under the Basel III rules) of around 10% at the end of 2012 underwhelmed the bulls this week, the broker said, coming in below its 10.4% forecast.

"After a strong run, more was needed to sustain the rally, but this is just a breather," the broker said.

Nevertheless, Nomura estimates that the current B3 CT1 ratio is at 10.5% and it expects HSBC to get to a 11.6% B3 CT1 ratio.

The broker highlighted the bank's strong cost performance last year, with the cost income ratio improving from 59.1% to 56.8% on an adjusted underlying basis. Meanwhile, the group's guidance implies a further $2.0bn in cost savings.

Meanwhile, Nomura said it was upbeat on revenues looking ahead: "At the CFO-analyst meeting, we came out feeling optimistic on the revenue outlook. Management's first option on excess capital is to try and grow organically. As focus moves from cost to revenues in an improving outlook, we expect revenues to meet company guidance of c7.0%."

On current valuations, the broker said that the implied growth premium is c1.0% for a company expected to grow revenue at least 5.0% for the next few years.

Shares were up 2.17% at 733.8p by 11:10 on Friday.

BC

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