HSBC update Aug. 1st, 2023
ISIN: GB0005405286
HSBC is one of the biggest banks in the world with a market capitalization of about 164 bn$. It makes business in 5 continents. It is present in retail banking, commercial banking, wealth banking and global banking with about the same share of each division in EBT.
HSBC had managed the corona panic without big damages thanks to its profitable Asian business. HSBC brought the European business back to profitability.
The bank sits in the rivalty between USA and China between the chairs. As its most profitable business is situated in HK & China it seems to make sense to take the chinese side. In the long run HSBC might become in the cold war US vs. China part of the chinese influence zone and a bridge head to the US influence zone.
HSBC is a woke bank following communist ESG targets. It is acting against its interests concerning the green dogma of "climate change" (22).
This is not a recommendation or proposal to do anything. The data written in this article is not guarranteed. It is my private personal opinion. I`m not independing as I own a position of HSBC shares.
Opportunities & Risks
Profitability increased in 2022 and H1/23 to levels before the financial crises and 0 interest rates thanks a net interest margin of about 1.7% in Q4/22 & H1/23. The expected credit lossed decreased to 1.1 bn$ in H1/23. It is assumed that this development will continue.
HSBC will return to quarterly dividends from 1Q23. A buy back of 2bn$ is planned. A special dividend of $0.21 per share in FY24, subject to completion of giving -up the Canadian business is planned.
HSBC makes business in 5 continents. But most of its profits are generated in Asia and the biggest profit generators are Hongkong and Mainland China. It sold and sells a lot of businesses outside Asia. It is going to become an Asian bank with some branches in Europe.
The big risk is that during the last years plenty of imbalances built up in the world. Debt is very high in most of the established 1st world nations and increasing fast. If this imbalances would offset it would hit nearly all investments including HSBC.
Observations
Retail banking is the bank’s largest business in terms of revenues. The high profitability is due to the strong position in Hong Kong. HSBC’s long presence and reputation in Hong Kong gives the bank a superior pricing power in this market.
Commercial banking esp. trade finance is HSBC’s original business. It is the second largest in terms of revenue but it is the biggest contributor of net income. This business is highly profitable. HSBC offers several services to companies to make business abroad such as trade and receivables finance, credit and lending, cash management. The bank’s extensive network in many countries means that its business model is difficult to copy, resulting in an excellent position.
I had an HSBC account in the Middle East. I had the impression that the employees worked according to plenty of strict, static rules and regulations and had very little room for own decisions and initiatives. I appreciated it as it is in some countries a big fear is that the account fades away over night or whatever. In Europe with its qualified well paid employees such a bureaucracy is an efficient hurdle vs. success.
It seems that HSBC wastes some of its energy with European left ideology as a gender campaign and a task force on climate-related financial disclosures. It is to hope that it will stop when the company becomes more Chinese/Asian.
Some Numbers
Despite of various share buy back programs in the last couple of years the number of HSBC shares is stagnating.
HSBC intend to aim for a payout ratio of 50% of the reported earnings for 2023 and 2024.
Share price August 1st, 2023: 6.55 GBP ->8.38$. PE(23) perhaps 8
The profit situation became far more balanced in 2022 than in the years before.
Asia is still the most profitable business. 
HSBC had already seen better times. A main reason for the low performance from 2010 till 2023 is the exposure in Europe and the low interest margin due to the negative interest rates implemented by the ECB. Now it seem to recover. The quarterly dividend of 10c/Q is back!
The regional split for 2018, 2019, 2020 shows an extreme imbalance of the profit generation. Nearly all profits were generated in Asia.
Some News
2023, March 24, HSBC acquires Silicon Valley Bank UK for £1.
2021, Aug. 20 In June, Beijing had passed new laws for the mainland that makes it illegal to comply with the sanctions placed on China's people and planned to implement the new laws in Hong Kong and Macau. HSBC might sit between the chairs of the USA and China. (21)
2021 May 27 HSBC backs out of U.S. retail banking (20)
2021 Feb 26 HSBC issued 20,694,049,366 ordinary shares of US$0.50. This figure includes 325,273,407 ordinary shares of US$0.50 which are held in Treasury. Voting rights on treasury shares are not exercisable. Therefore, the total number of voting rights in HSBC Holdings plc is 20,368,775,959.(19)
2020 Feb. 18 Due to substantial challenges in its key markets, HSBC is cutting 35,000 jobs from 235.000 and $100B in assets over the next three years, and will incur $7.2B of costs because of the restructuring. HSBC will also suspend buybacks for two years (but maintain its dividend) and close around a third of its 224 underperforming U.S. branches.
2019 Sept. 11 HSBC weighs selling its French money loosing retail bank business. (7),(8)
2020 jan 11, HSBC is going HSBC Holdings Plc has kicked off the sale of its French retail operations, (11). This is more or less a surrender as HSBC does not see the option to make this business sufficiently profitable again.
References:
(23) 2023, July 17 https://www.rigzone.com/news/wire/hsbc_leads_peers_in_advancing_climate_agenda_among_big_oil_analysis-17-jul-2023-173349-article/
(22) 2023, March 14 https://seekingalpha.com/news/3946721-hsbc-acquires-silicon-valley-bank-uk?v=1678762683#comment-94717142
(19) 2021, Feb 26 https://www.investegate.co.uk/hsbc-holdings-plc--hsba-/rns/total-voting-rights/202102261630035672Q/
(18) 2021, Feb 24 https://www.theguardian.com/business/nils-pratley-on-finance/2021/feb/23/a-demerger-is-hsbcs-only-way-to-solve-its-hong-kong-problem
(17) 2021, Feb 10 https://www.thestandard.com.hk/section-news/section/2/227425/HSBC-eyes-paying-dividend-for-2020
(16) 2021, Jan. 4 http://iis.aastocks.com/20210104/9566027-0.PDF
(15) 2020, Sept. 28 https://seekingalpha.com/news/3617509-ping-insurance-modestly-adds-to-hsbc-stake-shares-up-7?utm_medium=email&utm_source=seeking_alpha&mail_subject=hsbc-ping-an-insurance-modestly-adds-to-hsbc-stake-shares-up-7&utm_campaign=rta-stock-news&utm_content=link-1
(14) 2020, Sept. 21st https://fortune.com/2020/09/21/hsbc-stock-shares-today-fincen-china/
(13) 2020, Aug. 3rd https://www.irishtimes.com/business/financial-services/hsbc-warns-loan-losses-could-hit-13bn-as-profit-plunges-65-1.4320524
(11) 2020, jan 11 https://www.bnnbloomberg.ca/hsbc-kicks-off-sale-process-for-french-retail-business-1.1372207
(10) 2020, jan 06 https://www.bnnbloomberg.ca/hsbc-walks-tricky-political-tightrope-between-hong-kong-and-beijing-1.1369442
(9) 2019, oct 28 https://seekingalpha.com/news/3510027-hsbc-abandons-rote-target-11-percent-shares-slump-3_8-percent
(8) 2019, oct. 16 https://www.reuters.com/article/us-hsbc-france-m-a-banks/hsbc-taps-lazard-to-sell-french-retail-business-source-idUSKBN1WU20U
(7) 2019 Sept. 11 https://seekingalpha.com/news/3498625-hsbc-weighs-sale-french-retail-bank-wsj?dr=1#email_link
(6) 2019 Aug 19 https://strategicmacro.blogspot.com/2019/08/hsbcs-exposure-to-hong-kong-real-estate_6.html?spref=tw
(5) 2019/Aug. 19 https://www.bloombergquint.com/global-economics/hsbc-gets-cold-shoulder-in-china
(4) 2019/June o3 http://www3.hkexnews.hk/listedco/listconews/sehk/2019/0603/ltn20190603091.pdf
(3) 2019/May 29 https://invezz.com/news/by_region/uk/hsbc-share-price-group-plans-to-boost-asia-retail-wealth-staff/
(2) 2019/May/3rd https://seekingalpha.com/article/4259506-hsbc-holdings-plc-2019-q1-results-earnings-call-slides
(1) 2019/jan/09 https://www.theguardian.com/business/2019/jan/08/uks-most-unequal-bank-hsbcs-gender-pay-gap-grows-to-61
2018/oct/29 https://www.blick.ch/news/wirtschaft/banken-asien-geschaeft-treibt-hsbc-weiter-an-gewinn-steigt-id9039267.html
https://seekingalpha.com/article/4202154-hsbcs-high-dividend-yield-opportunity