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HSBC vs. BCS: Which Foreign Bank Deserves a Spot in Your Portfolio?
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Key Takeaways
HSBC is exiting non-core markets and redirecting $1.5B into its core Asia and Middle East strategy.
Barclays targets 2B pound in efficiency savings by 2026 after divesting several non-core businesses.
YTD, the BCS stock has jumped 52.8%, outpacing HSBC's 39.4% gain and the industry's 39.7% rally.
HSBC Holdings PLC (HSBC - Free Report) and Barclays PLC (BCS - Free Report) are two prominent foreign banks based in London that have been streamlining their operations to enhance efficiency and focus on core businesses.
While both companies have been taking efforts to reduce costs and exit non-core or low-return markets, HSBC has a particularly strong positioning in Asia. It focuses more on wealth management for high-net-worth and ultra-high-net-worth clients in the region. Can HSBC’s strategic pivot to Asia to drive growth outperform Barclays’ streamlining initiatives?
To find out which stock presents a better investment opportunity, let us evaluate the underlying factors driving each bank’s performance.
The Case for HSBC
HSBC has continuously been taking steps to streamline and refocus its global operations. In early 2025, it announced a $1.5-billion cost-saving plan from the organizational simplification efforts (to be achieved by 2026). HSBC will likely incur $1.8 billion in total severance and other upfront charges by the end of next year to implement these efforts. Also, the bank announced plans to redeploy an additional $1.5 billion from the strategic reallocation of costs from non-strategic or low-returning activities into its core strategy.
In sync with this, HSBC is winding down several non-core operations in the U.K., Europe and the United States, while maintaining a more focused presence in Asia and the Middle East. It is also progressing with divestments in Uruguay, Germany, South Africa, Bahrain and France. 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.
As part of its Asia pivot strategy, HSBC has been taking several steps. In mainland China, the company is growing its wealth business through lifestyle-focused centers, acquisitions like Citigroup’s retail wealth arm, digital upgrades and talent hires. In India, the company is expanding rapidly, with approval to open 20 branches, adding to its current 26.
As the country’s wealthy population surges, HSBC is boosting its presence through initiatives like launching Global Private Banking, acquiring L&T Investment Management and enhancing Premier Banking. These initiatives will likely help the company strengthen its position in the Asian and global markets.
However, HSBC’s revenue generation has been subdued over the past several quarters. While the interest rate environment across the world improved, the financial impact of the challenging macroeconomic backdrop continues to weigh on the company’s top-line growth. Not-so-impressive loan demand and a tough macroeconomic environment in many of its markets remain major headwinds.
The Case for Barclays
Barclays has also been striving to simplify operations and focus on core businesses. Last month, it agreed to sell its stake in Entercard Group to partner Swedbank AB for $273 million. In April 2025, it announced a collaboration with Brookfield to transform its payment acceptance business with plans to inject £400 million. In February 2025, it divested its Germany-based consumer finance business.
Last year, the company acquired Tesco’s retail banking business, which complements its existing business. Also, it divested its Italian mortgage portfolio. BCS further sold $1.1 billion in credit card receivables to bolster the lending capacity for Barclays Bank Delaware in the United States. In 2023, Barclays acquired Kensington Mortgage, which bolstered its mortgage business in the U.K. Driven by these initiatives, the company’s profitability is expected to improve over time.
Barclays’ structural cost actions have resulted in gross savings of £1 billion in 2024. The company aims to achieve gross efficiency savings of £0.5 billion this year. By 2026-end, management expects total gross efficiency savings of £2 billion and the cost-to-income ratio to be in the high 50s.
However, Barclays’ core operating performance remains unsatisfactory. Its net interest income (NII) and net fee, commission and other income have been witnessing a volatile trend over the last several quarters owing to a challenging operating backdrop.
Although NII and net fee, commission and other income rose in 2024 and the first six months of 2025 on the back of structural hedges and Tesco bank buyout, the uncertainty about the performance of the capital markets may weigh on the company’s top line.
HSBC & Barclays: Price Performance & Valuation
So far this year, Barclays’ shares have performed quite well on the NYSE compared with HSBC. The BCS stock has jumped 52.8%, while HSBC has gained 39.4%. The industry has rallied 39.7% in the same time frame.
YTD Price Performance
Image Source: Zacks Investment Research
Valuation-wise, HSBC is currently trading at a 12-month trailing price/tangible book (P/TB) of 1.30X. BCS, conversely, has a P/TB TTM of 0.79X currently. Thus, Barclays is relatively inexpensive compared with HSBC.
P/TB TTM
Image Source: Zacks Investment Research
How Do Estimates Compare for BCS & HSBC?
The Zacks Consensus Estimate for HSBC’s 2025 earnings suggests a year-over-year increase of 7.4%, while the same for 2026 indicates a marginal rise. Over the past 60 days, earnings estimates for 2025 and 2026 have been revised upward.
Earnings Trend
Image Source: Zacks Investment Research
Then again, the Zacks Consensus Estimate for BCS’ 2025 and 2026 earnings indicates 22.3% and 23.9% growth, respectively. Over the past 60 days, earnings estimates for 2025 have been unchanged while estimates for 2026 have been revised marginally higher.
Earnings Trend
Image Source: Zacks Investment Research
HSBC or BCS: Which Stock Is a Better Investment Option?
Barclays’ strategic capital redeployment to boost core businesses and restructuring efforts to improve efficiency paves the way for sustained profitability. Its impressive price performance this year indicates investor optimism.
While BCS has a more favorable valuation compared with HSBC, the latter’s pivot to Asia can yield significant long-term gains, especially as India and China’s affluent classes expand.
HSBC’s disciplined global exit strategy and cost-saving plan are expected to improve returns. Moreover, the upward earnings estimate revision for HSBC, as against no change in estimates for BCS, indicates that analysts are more optimistic regarding HSBC’s earnings growth potential in the near term. This makes HSBC a more attractive investment option today than Barclays.
Image: Bigstock
HSBC vs. BCS: Which Foreign Bank Deserves a Spot in Your Portfolio?
Key Takeaways
HSBC Holdings PLC (HSBC - Free Report) and Barclays PLC (BCS - Free Report) are two prominent foreign banks based in London that have been streamlining their operations to enhance efficiency and focus on core businesses.
While both companies have been taking efforts to reduce costs and exit non-core or low-return markets, HSBC has a particularly strong positioning in Asia. It focuses more on wealth management for high-net-worth and ultra-high-net-worth clients in the region. Can HSBC’s strategic pivot to Asia to drive growth outperform Barclays’ streamlining initiatives?
To find out which stock presents a better investment opportunity, let us evaluate the underlying factors driving each bank’s performance.
The Case for HSBC
HSBC has continuously been taking steps to streamline and refocus its global operations. In early 2025, it announced a $1.5-billion cost-saving plan from the organizational simplification efforts (to be achieved by 2026). HSBC will likely incur $1.8 billion in total severance and other upfront charges by the end of next year to implement these efforts. Also, the bank announced plans to redeploy an additional $1.5 billion from the strategic reallocation of costs from non-strategic or low-returning activities into its core strategy.
In sync with this, HSBC is winding down several non-core operations in the U.K., Europe and the United States, while maintaining a more focused presence in Asia and the Middle East. It is also progressing with divestments in Uruguay, Germany, South Africa, Bahrain and France. 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.
As part of its Asia pivot strategy, HSBC has been taking several steps. In mainland China, the company is growing its wealth business through lifestyle-focused centers, acquisitions like Citigroup’s retail wealth arm, digital upgrades and talent hires. In India, the company is expanding rapidly, with approval to open 20 branches, adding to its current 26.
As the country’s wealthy population surges, HSBC is boosting its presence through initiatives like launching Global Private Banking, acquiring L&T Investment Management and enhancing Premier Banking. These initiatives will likely help the company strengthen its position in the Asian and global markets.
However, HSBC’s revenue generation has been subdued over the past several quarters. While the interest rate environment across the world improved, the financial impact of the challenging macroeconomic backdrop continues to weigh on the company’s top-line growth. Not-so-impressive loan demand and a tough macroeconomic environment in many of its markets remain major headwinds.
The Case for Barclays
Barclays has also been striving to simplify operations and focus on core businesses. Last month, it agreed to sell its stake in Entercard Group to partner Swedbank AB for $273 million. In April 2025, it announced a collaboration with Brookfield to transform its payment acceptance business with plans to inject £400 million. In February 2025, it divested its Germany-based consumer finance business.
Last year, the company acquired Tesco’s retail banking business, which complements its existing business. Also, it divested its Italian mortgage portfolio. BCS further sold $1.1 billion in credit card receivables to bolster the lending capacity for Barclays Bank Delaware in the United States. In 2023, Barclays acquired Kensington Mortgage, which bolstered its mortgage business in the U.K. Driven by these initiatives, the company’s profitability is expected to improve over time.
Barclays’ structural cost actions have resulted in gross savings of £1 billion in 2024. The company aims to achieve gross efficiency savings of £0.5 billion this year. By 2026-end, management expects total gross efficiency savings of £2 billion and the cost-to-income ratio to be in the high 50s.
However, Barclays’ core operating performance remains unsatisfactory. Its net interest income (NII) and net fee, commission and other income have been witnessing a volatile trend over the last several quarters owing to a challenging operating backdrop.
Although NII and net fee, commission and other income rose in 2024 and the first six months of 2025 on the back of structural hedges and Tesco bank buyout, the uncertainty about the performance of the capital markets may weigh on the company’s top line.
HSBC & Barclays: Price Performance & Valuation
So far this year, Barclays’ shares have performed quite well on the NYSE compared with HSBC. The BCS stock has jumped 52.8%, while HSBC has gained 39.4%. The industry has rallied 39.7% in the same time frame.
YTD Price Performance
Image Source: Zacks Investment Research
Valuation-wise, HSBC is currently trading at a 12-month trailing price/tangible book (P/TB) of 1.30X. BCS, conversely, has a P/TB TTM of 0.79X currently. Thus, Barclays is relatively inexpensive compared with HSBC.
P/TB TTM
Image Source: Zacks Investment Research
How Do Estimates Compare for BCS & HSBC?
The Zacks Consensus Estimate for HSBC’s 2025 earnings suggests a year-over-year increase of 7.4%, while the same for 2026 indicates a marginal rise. Over the past 60 days, earnings estimates for 2025 and 2026 have been revised upward.
Earnings Trend
Image Source: Zacks Investment Research
Then again, the Zacks Consensus Estimate for BCS’ 2025 and 2026 earnings indicates 22.3% and 23.9% growth, respectively. Over the past 60 days, earnings estimates for 2025 have been unchanged while estimates for 2026 have been revised marginally higher.
Earnings Trend
Image Source: Zacks Investment Research
HSBC or BCS: Which Stock Is a Better Investment Option?
Barclays’ strategic capital redeployment to boost core businesses and restructuring efforts to improve efficiency paves the way for sustained profitability. Its impressive price performance this year indicates investor optimism.
While BCS has a more favorable valuation compared with HSBC, the latter’s pivot to Asia can yield significant long-term gains, especially as India and China’s affluent classes expand.
HSBC’s disciplined global exit strategy and cost-saving plan are expected to improve returns. Moreover, the upward earnings estimate revision for HSBC, as against no change in estimates for BCS, indicates that analysts are more optimistic regarding HSBC’s earnings growth potential in the near term. This makes HSBC a more attractive investment option today than Barclays.
At present, HSBC sports a Zacks Rank #1 (Strong Buy), whereas BCS carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.