ii view: HSBC Chief Executive departure overshadows results

by Keith Bowman from interactive investor |

HSBC delivers robust results, but not robust enough to save the Chief Executive. 

Half-year results

  • Reported revenue up 7.6% to $29.4 billion
  • Reported profit before tax up 15.8% to $12.4 billion
  • Dividend payment unchanged at 31 cents

Guidance:

The outlook has changed. Interest rates in the US dollar bloc are now expected to fall rather than rise, and geopolitical issues could impact a significant number of our major markets. In the near term, the nature and impact of the UK's departure from the European Union remain highly uncertain. We do not expect to achieve our 6% Return on tangible equity (ROTE) target in the US by 2020.

ii round-up:

Founded in 1865 in Hong Kong and now headquartered in London, HSBC Holdings (LSE:HSBA) serves more than 39 million customers worldwide. 

It employs around 235,000 staff across 3,800 offices in over 60 countries.

Services include both retail and commercial banking, global banking and markets, and wealth management. 

For a round-up of these half-year results, please click here.

ii view:

Despite exposure to the US housing market leading up to the financial crisis, HSBC given its strengths in Asia and the emerging markets avoided the government support which some rivals required. However, like rivals, the continuation of ultra-low interest rate policy has seen the bank recently attempting to kick start growth – setting out renewed strategic priorities. 

For investors, the change of the Chief Executive is a surprise, but does look to underline the board’s determination and impatience to grow the bank. The direction of US interest rates, geopolitical tensions and concerns for both the US and Chinese economies now overshadow. But a prospective dividend yield of over 6% (not guaranteed), should offer some compensation for those investors prepared to wait. 

Positives: 

A new Chief Executive may galvanise the bank and provide renewed clarity of purpose

Costs are being cut

HSBC passed the Bank of England stress test back in 2018

Negatives:

Exposure to economies suffering geopolitical tensions

New challenger banks have entered the Hong Kong market

Falling interest rates potentially hinder financial performance 

The average rating of stock market analysts:

Sell

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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