Will HSBC Leave the UK?

HSBC has been particularly vocal on the topic of regulatory costs, suggesting that it may move its headquarters out of the United Kingdom - what will this mean for shareholders?

Erin Davis 6 May, 2015 | 11:09AM
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HSBC's (HSBA) earnings were up in the first quarter as the bank enjoyed the benefit of favourable trends across the industry, but the 0.4% year-over-year and 4.0% linked-quarter increases in adjusted profit before tax were modest compared with the earnings increases reported by other global banks.

Still, HSBC's first quarter was nothing to sneeze at; return on average equity was 11%, above its ‘greater than 10%’ target, loan impairments fell seven basis points year over year to 0.24% of loans, and adjusted profit before tax grew in the largest three of HSBC's four primary business segments. We plan to maintain our fair value estimate for the narrow-moat bank.

HSBC continues to struggle to control costs, and its adjusted jaws (a measure of how much income growth exceeds expense growth) were negative 1.5% year over year despite the improvement in revenue.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
HSBC Holdings PLC429.70 GBP0.00Rating

About Author

Erin Davis  is a senior banking analyst for Morningstar.