HSBC Holdings’ (LON:HSBA) results have been skewed by last year’s sale of Brazilian operations, analysts at Hargreaves Lansdown have said. The comments came as Europe’s biggest bank updated investors on its quarterly performance yesterday, posting a rise in profits.
HSBC’s share price, however, closed 1.51 percent in the red at 737.00p yesterday, underperforming the broader UK market, with the benchmark FTSE 100 index ending the session 0.23 percent lower at 7,487.81 points. The group’s shares have added about 18 percent to their value over the past year, and are up by some 12 percent in the year-to-date.
Hargreaves Lansdown weighs in on results
While HSBC reported a five-fold increase in profits to $4.6 billion in the third quarter, Citywire quoted Hargreaves Lansdown’s senior analyst Laith Khalaf as commenting that the headline growth seen by the lender over the last year was “heavily skewed by the sale of its Brazilian operations in 2016, so the adjusted numbers give us a much better idea of what’s going on underneath the bonnet”.
The analyst further noted that a weak showing in investment banking had offset progress in the retail and commercial banking divisions.
“Regionally it’s Asia which is doing the heavy lifting for HSBC, and while the bank is headquartered in the UK and the second largest company in the FTSE 100, its business primarily resides in the Far East,” Khalaf commented, adding that the fortunes of Europe’s biggest bank were “therefore largely tied up in the Asian growth story, for better or worse”.
Other analysts on HSBC
Goldman Sachs, which has a ‘neutral’ rating on HSBC, set a price target of 845p on the stock today, while Shore Capital reiterated its ‘sell’ stance on the group yesterday, without specifying a price target on the shares. According to MarketBeat, the Asia-focused lender currently has a consensus ‘hold’ rating and an average price target of 718.22p.