HSBC’s stock (NYSE: HSBC
The company’s top-line declined by 2% y-o-y to $49.6 billion in 2021. It was primarily driven by lower revenue in treasury & trade solutions, followed by a significant drop in the FICC trading income. In terms of interest income, the bank’s total NII fell by 4% y-o-y because of interest rate headwinds. That said, the provisions for credit losses saw a favorable decrease from $8.8 billion to -$928 million. It resulted in an adjusted net income of $12.6 billion, which was more than triple the 2020 figure.
The low-interest rate environment weighed on the net interest income of lenders in 2020 and 2021. However, central banks across the world have started to hike the interest rates in 2022. We expect the NII to benefit from improvement in the net income margin, although the loan growth is likely to remain slow due to macroeconomic concerns. On the flip side, we anticipate the market-driven revenues to normalize with the recovery in the economy. Overall, HSBC revenues are expected to touch $52.2 billion in FY2022. Additionally, HSBC’s adjusted net income margin is likely to see a slight dip in the year, enabling the bank to touch $12.6 billion in adjusted net income. This coupled with an annual EPS of $3.11 and a P/E multiple of just above 13x will lead to the valuation of $42.
Here you’ll find our previous coverage of HSBC stock, where you can track our view over time.
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