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HSBC to Report Q1 Earnings: What's in Store for the Stock?
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London-based global bank, HSBC Holdings plc (HSBC - Free Report) is scheduled to announce first-quarter 2017 results on May 4, before the market opens.
Last quarter, this major foreign bank reported a loss owing to the continued revenue slump and several one-time write downs. However, decrease in loan impairment charges acted as a tailwind.
The dismal performance and uncertainty related to the fallout from the formal announcement of Brexit seem to have led to a bearish stance, as HSBC’s shares on NYSE ended the first quarter in red.
So, what to expect from HSBC results this earnings season? Let's see check out the factors might have affected the earnings in the quarter.
Factors to Impact Results
Trading & Investment Banking to Support Revenues: Driven by a gradual improvement in the operating environment and economic stability, the first quarter witnessed a rise in demand for debt and an increase in equity issuance. HSBC should have benefited from this upbeat trend. Also, underwriting fees in to-be-reported quarter must have improved.
In the wake of uncertainty related to policy matters and political changes, global deal making seems to have remained steady, reflecting over 6% rise in global deal value, according to the Thomson Reuters data. Thus, driven by this optimistic scenario, HSBC is likely to report a rise in advisory fees during the quarter.
Further, trading revenues are likely to show persistent improvement, driven by improved performance in bond and equity trading.
However, a persistent low interest rate environment across several major economies should continue hampering interest income growth. Further, as HSBC has been streamlining operations, this should hurt the top line to some extent.
Fall in Loan Impairment Charges: Loan impairment charges should trend lower in the quarter driven by improvement in operating environment. Also, easing stress on the energy sector loans will likely lead to further decline in loan impairment charges.
Cost Saving Efforts to Support Bottom Line: HSBC has been restructuring its operations. These efforts should significantly improve the bank’s operating efficiency and trim costs. However, legal and other regulatory expenses are bound to adversely affect its bottom line.
Among other foreign banks, Itau Unibanco Holding S.A. (ITUB - Free Report) , Mitsubishi UFJ Financial Group, Inc. and Bank of Montreal (BMO - Free Report) are scheduled to report results on May 3, May 15 and May 24, respectively.
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HSBC to Report Q1 Earnings: What's in Store for the Stock?
London-based global bank, HSBC Holdings plc (HSBC - Free Report) is scheduled to announce first-quarter 2017 results on May 4, before the market opens.
Last quarter, this major foreign bank reported a loss owing to the continued revenue slump and several one-time write downs. However, decrease in loan impairment charges acted as a tailwind.
The dismal performance and uncertainty related to the fallout from the formal announcement of Brexit seem to have led to a bearish stance, as HSBC’s shares on NYSE ended the first quarter in red.
HSBC Holdings PLC Price
HSBC Holdings PLC Price | HSBC Holdings PLC Quote
So, what to expect from HSBC results this earnings season? Let's see check out the factors might have affected the earnings in the quarter.
Factors to Impact Results
Trading & Investment Banking to Support Revenues: Driven by a gradual improvement in the operating environment and economic stability, the first quarter witnessed a rise in demand for debt and an increase in equity issuance. HSBC should have benefited from this upbeat trend. Also, underwriting fees in to-be-reported quarter must have improved.
In the wake of uncertainty related to policy matters and political changes, global deal making seems to have remained steady, reflecting over 6% rise in global deal value, according to the Thomson Reuters data. Thus, driven by this optimistic scenario, HSBC is likely to report a rise in advisory fees during the quarter.
Further, trading revenues are likely to show persistent improvement, driven by improved performance in bond and equity trading.
However, a persistent low interest rate environment across several major economies should continue hampering interest income growth. Further, as HSBC has been streamlining operations, this should hurt the top line to some extent.
Fall in Loan Impairment Charges: Loan impairment charges should trend lower in the quarter driven by improvement in operating environment. Also, easing stress on the energy sector loans will likely lead to further decline in loan impairment charges.
Cost Saving Efforts to Support Bottom Line: HSBC has been restructuring its operations. These efforts should significantly improve the bank’s operating efficiency and trim costs. However, legal and other regulatory expenses are bound to adversely affect its bottom line.
HSBC currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Among other foreign banks, Itau Unibanco Holding S.A. (ITUB - Free Report) , Mitsubishi UFJ Financial Group, Inc. and Bank of Montreal (BMO - Free Report) are scheduled to report results on May 3, May 15 and May 24, respectively.
5 Trades Could Profit "Big-League" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>