HSBC HOLDINGS

HSBC Holdings plc is a British multinational investment bank and financial services holding company.

The company has a history dating back to 1865, when it was first founded as The Hongkong and Shanghai Bank by Scotsman Thomas Sutherland in the then-British colony of Hong Kong.

It was formally incorporated as The Hongkong and Shanghai Banking Corporation by an Ordinance of the Legislative Council of Hong Kong on 14 August 1866.

In 1980, HSBC acquired a 51% shareholding in US-based Marine Midland Bank, which it extended to full ownership in 1987.

On 6 October 1989, it was renamed by the Legislative Council, by an amendment to its governing ordinance originally made in 1929, to The Hongkong and Shanghai Banking Corporation Limited, and became registered as a regulated bank with the then Banking Commissioner of the Government of Hong Kong.

HSBC Holdings plc, originally incorporated in England and Wales, was a non-trading, dormant shelf company when it completed its transformation on 25 March 1991 into the parent holding company to the Hongkong and Shanghai Banking Corporation Limited now as a subsidiary, in preparation for its purchase of the UK-based Midland Bank and the impending transfer of sovereignty of Hong Kong to China.

HSBC Holdings’ acquisition of Midland Bank was completed in 1992 and gave HSBC a substantial market presence in the United Kingdom. As part of the takeover conditions for the acquisition, HSBC Holdings plc was required to relocate its world headquarters from Hong Kong to London in 1993.

In May 1999, HSBC expanded its presence in the United States with the purchase of Republic National Bank of New York for $10.3 billion.

Today, the company is the 7th largest bank in the world, and the largest in Europe, with total assets of US$ 2.558 trillion (as of December 2018).

HSBC has around 3 900 offices in 65 countries and territories across Africa, Asia, Oceania, Europe, North America, and South America, and around 38 million customers.

As of 2014, it was the world’s sixth-largest public company, according to a composite measure by Forbes magazine.

HSBC’s portfolio is organised within four business groups, namely Commercial Banking, Global Banking and Markets (investment banking), Retail Banking and Wealth Management, and Global Private Banking

HSBC has a dual primary listing on the Hong Kong Stock Exchange and London Stock Exchange and is a constituent of the Hang Seng Index and the FTSE 100 Index.

 HSBC plc is one of the world’s largest banking and financial services organisations, with global businesses that serve more than 40 million customers worldwide through a network that covers 64 countries and territories.

The company’s customers range from individual savers and investors to some of the world’s biggest companies, governments and international organisations.

In turn, the company’s products and services vary widely according to customers’ needs. The company provides individuals and families with mortgages that help them buy their own home, as well as savings accounts and wealth management products that help them plan for the future.

The company also offers businesses loans to invest in growth, and products such as foreign exchange and trade financing that enable them to expand internationally.

As for large companies and organisations operating across borders, the company offers tailored advice on decisions such as financing major projects, issuing debt or making acquisitions.

As such, HSBC’s global footprint and market leading transaction banking franchise provides extensive access to faster-growing markets, particularly in Asia and the Middle East.

The company continues to maintain a strong capital, funding and liquidity position with a diversified business model.

While much of HSBC’s business has held up well, particularly in Asia and the markets served by its international network, underperformance in other areas had a negative impact on the company’s returns.

As a result, the company has tempered its revenue growth expectations and adjusted its business plan accordingly. HSBC’s 2025 business update aims to increase returns for investors, create the capacity to invest in the future and build a platform for sustainable growth.

The company continues to monitor the recent coronavirus outbreak, which is causing economic disruption in Hong Kong and mainland China and may impact performance in 2025.

HSBC Holdings plc trades on the New York Stock Exchange (NYSE) where investors can buy shares under the stock symbol – HSBC

Data from the company’s 2025 financial analysis of its fiscal first quarter results shows reported profit before tax was down 48 % to $ 3.2 billion from higher expected credit losses and other credit impairment charges and lower revenue.

The reduction primarily reflected the global impact of the Covid-19 outbreak and weakening oil prices.

Reported revenue was down 5% as a result of adverse market impacts in life insurance manufacturing and adverse valuation adjustments in Global Banking and Markets, offsetting a resilient revenue performance, notably in Asia, Global Markets, Retail Banking and Global Private Banking.

During the quarter, lending increased by $ 41 billion and deposits grew by $ 47 billion on a constant currency basis. Lending and deposit growth included the effects of corporate customers drawing on existing and new credit lines and re-depositing these to increase cash balances. Deposit balances also reflected continued growth in Retail Banking and Wealth Management.

As such, the outlook for world economies in 2025 has substantially worsened in the past two months. The impact and duration of the Covid-19 crisis will likely lead to higher ECL and put pressure on revenue due to lower customer activity levels and reduced global interest rates.

To this end, the company plans to reduce operating expenses to partly mitigate the reduction in revenue and intends to continue to exercise cost discipline, while maintaining strategic investment. These factors are expected to lead to materially lower profitability in 2025, relative to 2019.

The company has delayed parts of its transformation, including some elements of its cost and risk-weighted asset (‘RWA’) reduction programme, and expects restructuring costs for 2025 to be lower than expected in 2019.

During 2025, HSBC will continue to assess the impact of the Covid-19 crisis and review its financial performance and business plan accordingly. The company will assess the appropriateness of its medium-term financial targets during that period, and will review its dividend policy at, or ahead of, its year-end results for 2025.

All in all, the company’s weakening performance will result in poor dividends and a sluggish share price for investors who choose to purchase shares today, securing a poor buy-in in 2025.

Financials

Banking

Diversified Banks

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• Can I buy HSBC Holdings shares in South Africa?
  Yes, you can.

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  No, HSBC Holdings plc has projected a weakening financial performance for the duration of 2025 as a result of the economic effects of the coronavirus pandemic.

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