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
The SWOT analysis of HSBC is presented below:
| Strengths | Weaknesses |
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
|
| Opportunities | Threats |
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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The PESTLE/PESTEL analysis of HSBC is presented below:
| Political | Economical |
| 1. Political Uncertainty surrounding EU | 1. Growth synchronization of major economic regions
2. Interest Rate Environment
|
| Social | Technological |
1. Workforce diversity
2. HSBC education program
3. Digitisation of demography
| 1. Need for automation and digitisation
2. Launch of 'Move Money' and 'LinksScreen'
|
| Legal | Environmental |
| 1. Creation of UK ring-fenced bank | 1. Sustainable Operations and initiatives
2. Sustainability and Green Finance
|
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Detailed Pestle Analysis of HSBC
Political
1. Political uncertainty surrounding EU: Britain's exit from the EU has given rise to both geopolitical tensions and the possibilities of changing political agendas in lieu of the uncertain relationship that the two would share. Political developments in the region are likely to render market volatility and impact cross border banking models. Moreover, customers' needs and requirements will also be affected. What is essential for the business is that Europe must not allow its financial capacity and capabilities to be diminished. The outcome of the political negotiations should be such that Europe continues to enjoy at least the same amount of financial capacity and related risk management services, keeping the availability and pricing similar to what existed before the Brexit.
Economic
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Social
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Technological
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Legal
1. Creation of UK ring-fenced bank: The Independent Commission on Banking in 2011 had recommended the creation of UK ring-fenced bank. This has been one of the largest projects undertaken by the Group in terms of structural changes. The Prudential Regulation Authority in early July 2017, had provided a green flag thereby approving a restricted license for the new bank. This was an important event and a step ahead in the direction of the Group meeting its legal obligations. The Group is hence, targeting an advanced date of July 1,2018 against the statutory deadline of January 1,2019 to functionalize the UK ring-fenced bank. This transition ranks on the priority list of execution for HSBC.
Environmental
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TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
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Check Out Analysis of Other Relevant Companies
References used in HSBC SWOT & PESTLE 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
The detailed complete set of references are available on request in the 'Complete report' on purchase.
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