We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
HSBC Rides on Restructuring, Asia Expansion & Relatively High Rates
Read MoreHide Full Article
HSBC Holdings PLC (HSBC - Free Report) remains well-positioned for growth on the back of restructuring initiatives, relatively higher interest rates and expansion efforts in Asia. However, rising costs and subdued revenue generation are headwinds. Nonetheless, a solid capital position enables sustainable capital distributions.
Tailwinds for HSBC
Expansion in Asian Region: HSBC has consistently undertaken measures to enhance its performance, with a focus on building operations in Asia. The company aims to become a top bank for high-net-worth and ultra-high-net-worth clients in the region. Aligning with this, in August 2024, the company announced a partnership with Bajaj Allianz General Insurance in India to bolster its insurance solutions business. Further, last year, the company acquired Citigroup’s retail wealth management business in China and SilkRoad Property Partners Group in Singapore.
Moreover, it re-launched its private banking business in India and obtained approval to open bank branches in 20 new cities, which are at the center of expanding its wealth and international business.
In 2022, HSBC acquired 100% of the issued share capital of AXA Insurance in Singapore and L&T Investment Management Limited. Further, the company secured multiple additional licenses to expand its operations in mainland China. These initiatives are likely to strengthen the company’s position in Asia, which constitutes more than half of its operations.
Restructuring Efforts to Boost Efficiency: HSBC has been engaged in restructuring efforts to enhance its operational efficiency. In October 2024, the company announced an initiative to streamline its organizational structure, which became effective from Jan. 1, 2025. Driven by this restructuring initiative, the company aims to achieve approximately $1.5 billion of annualized savings by 2026-end.
The company will likely incur nearly $1.8 billion in total severance and other upfront charges by the end of next year to execute business simplification efforts. It also plans to reallocate an additional approximately $1.5 billion of costs from non-strategic activities to priority growth areas over the medium term.
In sync with this, the company announced the winding down of its investment banking activities in the U.K., Europe and the United States, and divestitures of its French life insurance arm, HSBC Assurances Vie (France) and private banking business in Germany. Apart from these, HSBC completed the sale of its businesses in the United States, Canada, New Zealand, Greece, Russia, Argentina and Armenia, as well as the retail banking operations in France and Mauritius. It also announced the planned sale of its business in South Africa.
Solid Capital Position: HSBC has a strong capital position despite an uncertain macroeconomic backdrop. As of Dec. 31, 2024, the company’s capital ratios were strong, driven by continued capital generation. Further, it has long-term investment grade ratings of A+, A3 and A- from Fitch, Moody’s and Standard and Poor’s, respectively.
Courtesy of its robust capital position and lower debt-equity ratio relative to its peers, the company has been rewarding its shareholders consistently. In 2024, HSBC returned $26.9 billion to shareholders through dividends and repurchases.
The company expects a dividend payout ratio of 50% for 2025. Further, it intends to initiate a share buyback of up to $2 billion, which will be completed by April 29, 2025.
HSBC currently carries a Zacks Rank #2 (Buy). Over the past six months, shares of the company have gained 28.6%, outperforming the industry’s growth of 10.2%.
Image Source: Zacks Investment Research
However, HSBC’s operating expenses rose in 2024 and are likely to remain elevated in the near term amid the company’s efforts to expand market share in the United Kingdom and Asia alongside initiatives to strengthen digital capabilities globally. Further, subdued revenue generation given a challenging operating backdrop, is another concern.
The Zacks Consensus Estimate for BCS’ current-year earnings has been revised 2.5% upward in the past 30 days. The company’s shares have gained 28.7% over the past six months.
The Zacks Consensus Estimate for NWG’s current-year earnings has been revised 7.6% north in the past month. Its shares have gained 29.8% over the past six months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
HSBC Rides on Restructuring, Asia Expansion & Relatively High Rates
HSBC Holdings PLC (HSBC - Free Report) remains well-positioned for growth on the back of restructuring initiatives, relatively higher interest rates and expansion efforts in Asia. However, rising costs and subdued revenue generation are headwinds. Nonetheless, a solid capital position enables sustainable capital distributions.
Tailwinds for HSBC
Expansion in Asian Region: HSBC has consistently undertaken measures to enhance its performance, with a focus on building operations in Asia. The company aims to become a top bank for high-net-worth and ultra-high-net-worth clients in the region. Aligning with this, in August 2024, the company announced a partnership with Bajaj Allianz General Insurance in India to bolster its insurance solutions business. Further, last year, the company acquired Citigroup’s retail wealth management business in China and SilkRoad Property Partners Group in Singapore.
Moreover, it re-launched its private banking business in India and obtained approval to open bank branches in 20 new cities, which are at the center of expanding its wealth and international business.
In 2022, HSBC acquired 100% of the issued share capital of AXA Insurance in Singapore and L&T Investment Management Limited. Further, the company secured multiple additional licenses to expand its operations in mainland China. These initiatives are likely to strengthen the company’s position in Asia, which constitutes more than half of its operations.
Restructuring Efforts to Boost Efficiency: HSBC has been engaged in restructuring efforts to enhance its operational efficiency. In October 2024, the company announced an initiative to streamline its organizational structure, which became effective from Jan. 1, 2025. Driven by this restructuring initiative, the company aims to achieve approximately $1.5 billion of annualized savings by 2026-end.
The company will likely incur nearly $1.8 billion in total severance and other upfront charges by the end of next year to execute business simplification efforts. It also plans to reallocate an additional approximately $1.5 billion of costs from non-strategic activities to priority growth areas over the medium term.
In sync with this, the company announced the winding down of its investment banking activities in the U.K., Europe and the United States, and divestitures of its French life insurance arm, HSBC Assurances Vie (France) and private banking business in Germany. Apart from these, HSBC completed the sale of its businesses in the United States, Canada, New Zealand, Greece, Russia, Argentina and Armenia, as well as the retail banking operations in France and Mauritius. It also announced the planned sale of its business in South Africa.
Solid Capital Position: HSBC has a strong capital position despite an uncertain macroeconomic backdrop. As of Dec. 31, 2024, the company’s capital ratios were strong, driven by continued capital generation. Further, it has long-term investment grade ratings of A+, A3 and A- from Fitch, Moody’s and Standard and Poor’s, respectively.
Courtesy of its robust capital position and lower debt-equity ratio relative to its peers, the company has been rewarding its shareholders consistently. In 2024, HSBC returned $26.9 billion to shareholders through dividends and repurchases.
The company expects a dividend payout ratio of 50% for 2025. Further, it intends to initiate a share buyback of up to $2 billion, which will be completed by April 29, 2025.
HSBC currently carries a Zacks Rank #2 (Buy). Over the past six months, shares of the company have gained 28.6%, outperforming the industry’s growth of 10.2%.
Image Source: Zacks Investment Research
However, HSBC’s operating expenses rose in 2024 and are likely to remain elevated in the near term amid the company’s efforts to expand market share in the United Kingdom and Asia alongside initiatives to strengthen digital capabilities globally. Further, subdued revenue generation given a challenging operating backdrop, is another concern.
Other Foreign Banking Stocks Worth Considering
Some other top-ranked foreign banking stocks worth a look are Barclays PLC (BCS - Free Report) and NatWest Group PLC (NWG - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks Rank #1 stocks here.
The Zacks Consensus Estimate for BCS’ current-year earnings has been revised 2.5% upward in the past 30 days. The company’s shares have gained 28.7% over the past six months.
The Zacks Consensus Estimate for NWG’s current-year earnings has been revised 7.6% north in the past month. Its shares have gained 29.8% over the past six months.