Asia Slowdown Hits HSBC

HSBC's focus on Asia will mean short-term pain as the region slows, say Morningstar equity analysts. Volatile conditions there had caused worry about losses

Erin Davis 3 November, 2015 | 8:00AM
Facebook Twitter LinkedIn

HSBC's (HSBA) third-quarter headline profit before tax of $6 billion was up by nearly a third compared with the year-ago quarter, primarily because of a $1.1 billion noncash accounting gain on the bank's own debt and the non-recurrence of large misconduct provisions in the year-ago quarter. Underlying results were much less impressive and showed the impact of slow economic growth, in our opinion.

A move to Hong Kong could subject HSBC to more meddling by the Chinese government

Adjusted profit before tax of $5.5 billion was down 14% from the year-ago quarter, as adjusted revenue fell 4% and adjusted costs grew 2%. Despite the difficult quarter, return on average tangible equity remained reasonable, at 12.1% for the nine months ending September, and we think the bank's narrow moat is intact. Our long-term view that the bank can outearn this by about 100 basis points as conditions improve is also intact, and we plan to maintain our fair value estimate.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
HSBC Holdings PLC438.05 GBX0.44Rating

About Author

Erin Davis  is a senior banking analyst for Morningstar.

Audience Confirmation


By clicking 'accept' I acknowledge that this website uses cookies and other technologies to tailor my experience and understand how I and other visitors use our site. See 'Cookie Consent' for more detail.

  • Other Morningstar Websites
© Copyright 2021 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Cookies       Modern Slavery Statement