Berenberg downgraded HSBC to 'hold' from 'buy', saying the UK bank was now fully valued, but reaffirming a belief that it will be a winner in the long term.
Analysts at Berenberg maintained HSBC's 12-month target price at 600p per share.

The German investment bank said HSBC's 7% implied cost of equity was now too low to remain at a 'buy' rating. While many analysts have cited HSBC's weaker-than-expected revenue growth as a cause for concern, Berenberg suggested it was more a reflection of the risk focus within the company.

“HSBC is on our long-term winner list due to two main factors. Firstly, its focus on risk and return, and secondly, its focus on cutting costs in absolute terms. We see these two traits enabling HSBC to continue delivering sustainable capital return,” Berenberg analysts said.

HSBC's capital return was estimated at $13bn per annum, and in the current low-growth climate that is not enough for sustained profits, according to Berenberg.

“If we assume zero growth in this capital return, which seems fair considering where we are in the long-term financial cycle, the market-implied cost of equity for HSBC is 7%. For us, this is too low, despite HSBC being a long-term winner.”

Despite concerns for financial services firms in the aftermath of last year's Brexit referendum, HSBC has gained over 56% in the stock market in the last year.

On Tuesday, the London-based bank was 0.51% lower at 725p as of 1038 BST.