The HSBC (LSE:HSBA) share price has skyrocketed over the last year. It has risen 75% over this period and is trading at 1,340p. If maintains its growth rate, it could reach P2,000 by the end of the year, another 50% more than currently. While some may think this is a pretty bold prediction, here’s why it might not be crazy.

Inflation and interest rates

One of the main factors that could justify such an enhance is the continued higher and longer interest rate environment. The global energy price shock that began in February has forecasters expecting global inflation to rise. We’ve already seen the beginning of this, with the March US inflation news last week. That could prompt central banks around the world to raise interest rates this summer to counter inflation.

HSBC is more sensitive to global rates than other competitors such as Lloyds Banking Group due to its vast deposit base and forceful global presence. If rates rise, net interest margins will enhance, increasing profitability. The bank has already achieved very high profit dynamics in 2025, which was a key factor in the rapid enhance in share prices. Therefore, it is not unrealistic to assume that a rise in interest rates due to inflation could continue to drive corporate stocks.

The net interest margin in 2025 was 1.59%, an enhance of 0.03% compared to the previous year. If global central banks raise base rates by an average of 0.5%, the net interest margin for HSBC could rise again to around 2%. Theoretically, this should enhance net interest income by approximately 25%, which could directly enhance profits by a similar amount. If earnings also enhance in addition to net interest income, it is not impossible that the share price will reflect a jump of 25% and then even more, given the speculation and emotions that could arise.

Quotation

Even after last year’s jump, the price-to-earnings ratio (P/E) stands at 15.09, which is below FTSE100 average coefficient 17.6. Therefore, there is a possibility of a price enhance even without a significant enhance in profits, because they are not overvalued.

If we assume earnings per share remain unchanged, moving to 2000p would enhance the P/E ratio to 22.64. This is not excessive at all. There are other financial services companies with this ratio. For example, M&G has a coefficient of 23.64.

My point is that the latest annual results showed that HSBC is performing well on a variety of fronts, from wealth management to expansion in Asia. So even if this continues its momentum, the share price could still rise to 2,000p as investors are eager to buy shares that are not overvalued.

The most essential thing

Of course, reaching P2,000 at the end of the year is a gigantic achievement. This may not happen for several reasons. Operating in China carries geopolitical risks, especially if trade tensions with the U.S. enhance again. There is concern that high inflation could be harmful to the bank if it leads to higher loan defaults. Finally, the company is still in the restructuring phase, so it may not go as planned, which would be a disadvantage.

Ultimately, however, I believe that the HSBC share price is poised to rise this year and I am seriously considering investing.