HSBC – The Giant’s Feeling Brighter

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HSBC – The Giant’s Feeling Brighter
geralt / Pixabay

HSBC Holdings plc (LON:HSBA)’s underlying revenue fell 1% to $12.2bn in the third quarter, reflecting negative market impacts in life insurance and lower trading revenues in debt markets following a particularly strong result last year. The global low interest-rate environment also continues to weigh.

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Q3 2021 hedge fund letters, conferences and more

ValueWalk’s December 2021 Hedge Fund Newsletter: Hedge Funds Avoid Distressed China Debt

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Provisions for bad loans swung from an $823m charge to $659m release, underpinning a 36% improvement in pre-tax profit of $1.6bn.

CEO Noel Quinn said “we believe that the lows of recent quarters are behind us”, and the group announced a new $2bn share buyback programme.

The shares were unmoved following the announcement.

HSBC Announces A Share Buyback Programme

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown:

“HSBC is a giant in its industry, and with signs of more positive economic conditions comes a brighter set of results. Pre-tax profits have been buoyed by a huge swing in expected credit losses – with a chunky charge this time last year, turning into a release that buffer this quarter. The group is so confident about the direction of travel, it’s announced a $2bn share buyback programme.

A CET1 ratio well above target risks looking like a waste of uninvested equity, and capital returns are one way to deal with that. However, a lack of available investment opportunities could be a potential concern for more growth minded investors.

HSBC is the latest bank to hint at an expected hike in interest rates. This helps elevate the mood because higher interest rates improve the profitability of loans. All in, the picture is looking healthier for HSBC, but while interest rates remain on the floor, the group will continue to be held back. One thing the group has in its favour is a highly diversified business model, which means when one area struggles, another can pick up the slack. Both its sprawling geographical footprint, plus alternative banking activities, like consulting and trading businesses, means HSBC is in a more enviable position than others.”


About Hargreaves Lansdown

Over 1.67 million clients trust us with £138.0 billion (as at 30 September 2021), making us the UK’s number one platform for private investors. More than 98% of client activity is done through our digital channels and over 600,000 access our mobile app each month.

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Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver
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