So far the UK banks are doing a pretty good job of emulating the stellar performance of their American cousins earlier this month.
Hot on the heels of better than expected third quarter numbers from Barclays and HSBC has also smashed forecasts.
The company is even feeling sufficiently flush, having stored up more funds than it needed to withstand the pandemic, to return cash to shareholders through a big share buyback.
“However, really HSBC is benefiting from conditions not being quite as bad as expected and beneath the surface there are some more troubling signs in these numbers,” said AJ Bell’s Russ Mould.
“The net interest margin, a key measure of banks’ profitability, is down suggesting HSBC is falling down somewhat on the basics of banking.
“Despite stripping out costs, HSBC now faces a considerable challenge from wage inflation given a wider environment of rising prices.
“The flipside of inflation is it may well lead to interest rates being hiked sooner rather than later which could help boost HSBC’s profit.
“HSBC also has exposure to a Chinese property market which is still awaiting with bated breath any fall-out as huge property developer Evergrande teeters on the brink.
“Despite these short-term issues its clear China, and Asia more generally, is still the prize HSBC is chasing, with money and resources thrown at the region and its wealth management arm an area of priority as it looks to tap into a burgeoning middle class.
“The company’s investment banking arm wasn’t quite the boon it had been to the US banks and Barclays with a focus on the debt markets meaning it missed out on its share of the global M&A bonanza.”
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