HSBC SWOT & PESTLE Analysis
COMPANY PROFILE -HSBC
Business Sector :Banking and Financial Services
Operating Geography :Global
About HSBC :
Driven by four major business segments, namely, Commercial Banking, Global Banking and Markets, Global Private Banking and Retail Banking and Wealth Management; HSBC is one of the world's largest banks. It is headquartered in London, United Kingdom. The bank was originally founded in 1865 with branches being opened in Hong Kong and Shanghai. It was only in 1991 that the Hong Kong and Shanghai Banking Corporation formed the bank in its current form in London as a new holdings company. The name of the bank still represents in initials the name of the Hong Kong and Shanghai Banking Corporation. The bank’s acquisition of Midland Bank in 1992 was a watershed moment in its history as it gave the bank significant presence in the UK. Also, with the passing on of the sovereignty of Hong Kong to China being imminent, this acquisition allowed the bank to shift headquarters to London in 1993.It has an international coverage with significant footprints in the markets of Europe, Asia, Middle East and North Africa, North America and Latin America. All these include 3900 offices across 67 countries and territories. In 2018, the bank became the largest bank of Europe and the 7th largest bank of the world.
The mission statement of HSBC reads, “achieve growth by being socially focused, customer centered and commercially driven.” Its vision is “to be the bank of choice for organizations and businesses that aim to create community, social and environmental benefits.” As per early 2019 records, the bank employs over 235,220 employees worldwide.
HSBC Revenue :
$75.436 bn– FY ending 31st Dec 2018 (y-o-y growth 13.2%)
$66.639 bn– FY ending 31st Dec 2017 (y-o-y growth 32.43%)
$50.32B bn– FY ending 31st Dec 2016
Competitive Analysis of HSBC
| 1. Geographic and business line diversification 2. Strong capitalization 3. Good dividend record 4. Sound financials | 1. Rising operating costs 2. Lack of good customer experience |
| 1. Opening of China's domestic capital markets 2. Growth prospects in Asia 3. Benefits from transition in senior leadership | 1. Financial Crime 2. Risk Exposure in Qatar |
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Detailed SWOT Analysis of HSBC
Strength
1. Geographic and business line diversification: In the words of Stuart Gulliver, HSBC is a bank that is bestowed with a diversified yet universal banking business model. The business model comprises of one Corporate Centre and four global businesses, namely; Retail Banking and Wealth Management (RBWM), Commercial Banking (CMB), Global Banking & Markets (GB&M) and Global Private Banking (GPB). This business diversification into specialised fields coupled with the exceptional talent pool that business possesses has made HSBC one of the world's largest banks. This sort of an operating model combined with capital strength and international network, provides HSBC a hedge even amidst political and economic instabilities. This was evident at the time of Brexit when customer activity across different business segments remained resilient. It was therefore credited with the prestigious title of 'World's Best Bank' at the Euromoney Awards of Excellence 2017.
2. Strong capitalisation: HSBC enjoys a strong capital position supported by the fact that its CET1(Capital Equity Tier 1 Ratio) is 14.6%. Also, in accordance to the strategic measures being followed by the company it will lower its Risk Weighted Assets (RWA). Since the start of 2015 until now, RWAs worth $296 billion have been extracted. The size of balance sheet has increased, stimulated by an increase in customer accounts. Total reported assets were 5% higher in 2017 than in 2016. It is because of this strong capitalization that HSBC has been able to affect share buybacks and provide a sustainable dividend.
3. Good Dividend record: HSBC is an attractive investment for investors owing to its good dividend history and luring dividend yield. Even at times of lower earnings, HSBC has provided stable and sustainable dividends to maintain investor confidence. It at present offers a dividend yield of 5.3%, which is notably the high compared to its large global peers. While currently the dividend payout ratio was 60% in 2016, it is expected to be 70% on 2019. An upward trend is expected in the dividend yield in lieu of the share buybacks, which is an attractive factor for income oriented investors.
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Weakness
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Opportunity
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Threat
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Check Out Analysis of Other Relevant Companies
TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
References used in HSBC Analysis Report
1. HSBC revenue 2018 - https://www.macrotrends.net/stocks/charts/HSBC/hsbc/revenue
2. HSBC Annual Report 2019 - https://www.about.hsbc.co.in/-/media/india/en/financial-information/annual-reports/190722-annual-report-2019.pdf
3. HSBC Annual Report 2018 - https://www.about.hsbc.co.in/-/media/india/en/financial-information/annual-reports/180709-annual-report-2018.pdf 4. HSBC company profile - https://in.reuters.com/finance/stocks/company-profile/HSBA.L
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HSBC SWOT & PESTLE Analysis - SWOT & PESTLE.COM
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