London
Mixed outlook on HSBC: “If there was an award for simple and clean results, then HSBC would get the booby prize,” says Matt Britzman of Hargreaves Lansdown. The Asia-focused bank booked a $3bn impairment on its 19% stake in China’s Bank of Communications in the fourth quarter as well as a $2bn write-down from the sale of its French operation. Profit before tax in the last three months of 2023 fell to $1bn from $5.1bn a year earlier. “Mainland China remains a question mark… [while the] commercial real estate sector [there] continues to be weak.” Return on tangible equity (ROTE) is expected to be in the “mid-teens” this year, with costs and loan-loss levels expected to rise. Even so, HSBC has announced a $2bn share buyback as “a teaser of more to come once the sale of its Canadian business completes”, expected this quarter. “But when it comes to UK banks, the more traditional lenders like NatWest and Lloyds look to be better placed for the upside.”
That view overlooks the success of HSBC’s CEO Noel Quinn (pictured) in “delivering consistently strong returns” at the $155bn lender, says Una Galani on Breakingviews. Pre-tax profits for 2023 actually rose 78% to $30.3bn. “What’s particularly encouraging is HSBC’s diversification in Asia.” Pain in its core Hong Kong market is being partly offset by growth elsewhere. Should HSBC be able to achieve ROTE of, say, 15% this year, then its stock ought to trade closer to 1.5 times its one-year forward tangible book value than its current 0.9 times, making it more of a bargain than global peers, such as Singapore’s DBS. Yet “convincing the market to cheer [HSBC’s successes] may be Quinn’s hardest task”.
Islamabad
Coalition government agreed: Two of Pakistan’s biggest pro-establishment parties agreed to form a coalition government ten days after a contentious election resulted in a hung national assembly, says Al Jazeera. The Pakistan People’s Party (PPP), led by Bilawal Bhutto Zardari, the son of former premier Benazir Bhutto, who was assassinated in 2007, and the Pakistan Muslim League-Nawaz (PMLN), led by three-time former prime minister Nawaz Sharif, nominated Zardari’s father, Asif Ali Zardari, for president and Sharif’s brother, Shehbaz Sharif, as their candidate for prime minister. A vote will follow a parliamentary session, which must be called by 29 February. The party of jailed former prime minister Imran Khan, Tehreek-e-Insaf (PTI), branded its rivals “
