HBCYF - HSBC Holdings: Offering Attractive Distribution-Led Returns Potential

2024-03-15 00:43:33 ET

Summary

• HSBC is finally enjoying solid profitability at the business level, with its return on tangible equity comfortably in the double digits thanks to higher interest rates.
• While net interest income has now topped out, earnings will take some time to normalize lower, helped by still-sound credit quality, reduced interest rate sensitivity, and non-NII income.
• With the stock trading just below tangible book value, above-average capital returns potential can power attractive returns for investors.

Shares of HSBC Holdings ( HSBC ) have been a disappointing long-term performer, matching struggling European financials ( EUFN ) despite the London-listed giant earning the lion's share of its profit in Asia. Underperformance has been particularly stark compared to comparatively well-run regional banks like Singapore's 'Big Three', with that registering anywhere between around 60ppt and 180ppt over the past decade....

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