QUOTE AND NEWS
The Hindu Business Line  Jul 18  Comment 
India keeping close track of Swiss domestic law developments
Forbes  Jul 18  Comment 
Comparing units outstanding versus one week ago at the coverage universe of ETFs at ETF Channel, the biggest inflow was seen in the iShares U.S. Preferred Stock ETF (PFF), which added 3,700,000 units, or a 1.4% increase week over week.  Among the...
guardian.co.uk  Jul 17  Comment 
Competition and Markets Authority to report back on competition in current accounts and small business banking on Friday Britain's banks are braced for an inquiry into competition on the high street to be signalled on Friday when the competition...
The Hindu Business Line  Jul 16  Comment 
Gurgaon-headquartered Canara HSBC Oriental Bank of Commerce Life Insurance Co Ltd – a joint venture between Canara Bank (51 per cent), Oriental Bank of Commerce (23 per cent) and HSBC Insurance...
The Hindu Business Line  Jul 15  Comment 
Gurgaon-headquartered Canara HSBC Oriental Bank of Commerce Life Insurance Co Ltd – a joint venture between Canara Bank (51 per cent), Oriental Bank of Commerce (23 per cent) and HSBC Insurance...
Financial Times  Jul 11  Comment 
Samsung takes some knocks; Maersk, HSBC and insider trading case also in the news
The Economic Times  Jul 11  Comment 
The government has stuck to its ambitious fiscal deficit targets and has given the right messages on manufacturing, HSBC said in a report.
The Hindu Business Line  Jul 11  Comment 
HSBC’s global research said in a report today that it expects some slippage with the budget deficit at 4.5 per cent of GDP considering that Arun Jaitley, had set the bar high. It pointed...
Wall Street Journal  Jul 10  Comment 
Mike Cherkasky, the overseer of HSBC Holdings' anti-money-laundering efforts, will launch a consulting firm to help companies stay out of legal and regulatory trouble.




 
TOP CONTRIBUTORS

HSBC Holdings, PLC (Symbol: HBC) is a London-based banking and financial services organization that isn't indebted to the British government. [1] This sets the company apart from several U.K. competitors, like Barclays (BCS), Royal Bank of Scotland (RBS-LN), and Lloyds Banking Group (LYG), who have resorted to borrowing.[2] For the full year 2010 ended in December, HSBC reported a total interest income of $80B and a net profit of $14.2B.[3] While HSBC is headquartered in the UK, its operations where impacted by the financial crisis which started in the US. Because it is not an American company, it was not able to receive the same bailout opportunities as American banks and instead relied on British bailout money.

Business Overview

For the full year 2010 ended in December, HSBC reported a total interest income of $80B and a net profit of $14.2B.[3] HSBC Holdings operates in four main business segments. The financial crisis has distorted the net income break down of each segment. The Personal Financial Services, Commercial Banking, and Global Banking & Markets have traditionally earned equal portions of Net Income.[4]

Personal Financial Services (18% of 2010 Pretax profits)[4])

Personal Financial Services provides savings accounts, mortgages, personal loans, and credit cards. Within this segment is the HSBC Premier banking service, which offers 24-hour priority telephone access and free international funds transfer between HSBC accounts.[2]

Commercial Banking (31% of 2010 pretax profits[4])

The Commercial Banking segment offers banking products to corporate, mid-market, small, and micro businesses. These products include financing, cash management, international trade, and investment banking. [2]

Global Banking & Markets (50% of 2010 pretax profits [4])

The Global Banking & Markets segment offers financial products to major government, corporate, and institutional clients worldwide. These products include foreign exchange, currency and interest rate derivatives, and private equity managers.[2]

Global Private Banking (4% of 2010 pretax profits[4])

The Private Banking segment offers trustee services to high net worth individuals. These services include cash management, clearing, wealth management, and inheritance planning.[2]

Trends and Forces

Housing Market and Economic Conditions

HSBC owns large sets of mortgages which either it purchased or it originated. This makes it dependent on the housing market. An increased rate of foreclosure will cause the company to writeoff mortgages and attempt to sell them on the market. Selling houses becomes more difficult the more that the housing market declines. By contrast, the growth of the housing market allows HSBC's assets to become more reliable and likely to be paid.[5] [6]

HSBC issues rights to raise capital

HSBC [6] historically issued rights to allow existing shareholders to purchase additional securities at a discounted price.[1][7] This has allowed HSBC to avoid needing government capital, unlike its competitors Royal Bank of Scotland (RBS-LN) and Lloyds Banking Group (LYG), giving investors more confidence in HSBC. While issuing rights to prevent HSBC from raising capital, the company no longer has any rights to offer and so if it needs more capital, it will be forced to borrow from the government.

U.K. Banks are affected by changes in the US

As a U.K. based bank, HSBC is relatively insulated from U.S. crisises. However, U.K. banks have U.S. commercial real estate exposures -- in the form of loans and other debt mortgage-backed securities (MBS).[8] So hardships in the U.S. housing market and banks suffering losses due to subprime lending in turn causes foreign banks to suffer losses. However, because the UK tends to react after the US market has, this means that US banks are sometimes able to rise out of recessions sooner than UK based banks.

Competition


References

  1. 1.0 1.1 Investopedia, "Rights Offering"
  2. 2.0 2.1 2.2 2.3 2.4
  3. 3.0 3.1 HBC 2011 10-K "Report of the Directors: Operating and Financial Review" pg15-16
  4. 4.0 4.1 4.2 4.3 4.4 HBC 10-F 2011 Report of the Directors: Operating and Financial Review "Summary" p37
  5. Forbes, "HSBC Pays for its Mistakes," 03/02/09
  6. 6.0 6.1 Forbes, "AIG,HSBC Leave Europe Scarred," 03/02/09
  7. Bloomberg, "HSBC Finds Buyers for 97% of Record Rights Offering," 04/06/09
  8. Seeking Alpha, "Second Stress Wave for European Banks," 04/23/09
  9. Barclays 2008 Annual Report
  10. RBS Website, "Financial Results"
  11. LYG website, "About Us"
  12. Citigroup website, "About"
  13. Bank of America website, "About"
  14. J.P. Morgan website, "About Us"
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki