The HSBC share price rose by 3.2% in Hong Kong as investors reacted to the latest earnings report. It jumped to a high of $105 from this week’s low of $100 and below the year-to-date high of $112.
HSBC reported mixed earnings
HSBC stock price jumped after the company published its financial results, which demonstrated it resilient revenue growth during the quarter. These numbers, however, were affected by $1.4 billion charge, which was related to the Madoff scandal.
HSBC made a profit before tax of $77.3 billion and a profit after tax of $5.5 billion. The Return on Tangible Equity (RoTE) slipped to 12.3% from 15.5% in the same period last year.
HSBC’s revenue rose modestly to $17.8 billion, helped by its wealth and Hong Kong businesses. Its growth and market share in Hong Kong explain why the company decided to fully acquire Hang Seng Bank.
HSBC Bank’s net interest income rose to $8.8 billion. This is an important metric that shows the difference between the interest it makes on assets and what it pays on liabilities. It is usually affected by the benchmark interest rates.
HSBC bank’s results were impacted by an unexpected charge of $1.1 billion on provisions tied to Bernard Madoff’s fraud case a decade ago. It also took a $200 million charge related to its real estate business in Hong Kong. Still, the management believes that the company will continue growing, with the CEO saying:
“We are becoming a simple, more agile, focused bank, built on our core strengths. The intent with which we are executing our strategy is reflected in our performance this quarter, despite taking legal provisions related to historical matters.”
HSBC turnaround continues
HSBC has been implementing a robust turnaround efforts as it intensified its operations to its Chinese business.
The company has sold some of its global operations, including its businesses in the United States, France, Canada, Argentina, and Turkey. Its goal has been to sell these assets and increase its focus on the Asian market, which it sees as having the most potential.
The company recently acquired the remaining stake in Hang Seng Bank, giving it a big market share against other companies like Bank of China, Standard Chartered, and DBS.
Some analysts believe that Hong Kong’s role in the financial services industry will continue growing in the coming years, with some expecting it to pass Switzerland by 2030.
HSBC is also benefiting from the substantial savings by Chinese citizens as the economic growth continues. It estimated that citizens hold about $43 trillion across financial institutions, a figure that has grown following the collapse of the real estate industry.
In HSBC’s case, customer accounts increased by $18.6 billion, hitting over $1.73 trillion.
HSBC share price technical analysis
The weekly timeframe chart shows that the HSBC stock price has been in a strong bull run since the pandemic when it bottomed at $20.50. It then jumped by 450% and hit a high of $112.2 as bank stocks surged and its turnaround efforts continued.
The stock remains above all moving averages and is now between the ultimate resistance and the overshoot level of the Murrey Math Lines tool.
Therefore, the most likely scenario is where it continues rising, potentially to the extreme overshoot level of the Murrey Math Lines tool at $112. A drop below the ultimate resistance level at H$100 will invalidate the bullish outlook.
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