Hargreaves Lansdown argues that HSBC Holdings’ (LON:HSBA) latest results show that the blue-chip lender is struggling to convince that its focus on Asia is delivering a pick-up in growth, Citywire reports. The comments came after Europe’s biggest bank posted its interims yesterday, reporting a rise in pre-tax profits and saying that it was taking steps to deliver its strategy outlined earlier this year.
HSBC’s share price, however, reacted negatively to the update, giving up 1.01 percent to 708.60p. The stock underperformed the broader UK market, with the benchmark FTSE 100 index gaining 4.68 points to close 0.06 percent higher at 7,663.78.
Hargreaves Lansdown comments on results
Citywire quoted HL Select UK Income Shares fund manager Steve Clayton as commenting yesterday that HSBC was “struggling to convince that its current restructuring to pivot the group towards Asia is delivering the hoped for pick-up in growth”. He noted that while the lender was ‘in a strong place’ financially, its return on equity was still less than nine percent, “showing difficulties major banks face these days in trying to earn a high rate of return in an increasingly regulated financial world”.
The analyst further pointed out that the “underlying revenue growth picture is perhaps better than the headlines suggest” and that the FTSE 100 group’s “potential for growth from China and the wider South East Asian region ought to be good”.
Other analysts on Asia-focused lender
Royal Bank of Canada and JPMorgan Chase & Co, both of which rate HSBC as a ‘neutral,’ set price targets on the stock in the wake of the lender’s results, at 730p and 780p, respectively. According to MarketBeat, Europe’s biggest bank currently has a consensus ‘hold’ rating and an average price target of 768.89p.