HSBC’s stock (NYSE: HSBC) performed well this year, rising by about 11% since early January. This compares to rival Barclays (NYSE: BCS) stock, which gained almost 15% over the same period, and JP Morgan (NYSE: JPM), which remains up by about 9% over the same period. So what’s happening with HSBC and what trends are expected to drive the stock in 2025?
HSBC’s financial performance has remained fairly robust. In 2024, HSBC recorded pre-tax profits of $32.3 billion, up 6% year-over-year on a reported basis. During the most recent quarter, banking net interest income—the primary revenue driver—has trended lower. While elevated interest rates in 2023 allowed HSBC to earn more on its $1.7 trillion-plus deposit base, this metric has been declining as rates ease. Although the U.S. Federal Reserve, which typically sets the tone for global interest rates, has signaled a slower pace of rate cuts for 2025, HSBC could face some pressure. The bank projects banking net interest income of around $42 billion in 2025, down about 4% compared to 2024.
HSBC is increasingly relying on fee-based products in segments such as its Wealth and Personal Banking division to drive growth. Wealth business revenue increased by 18% on a constant currency basis in 2024, with the Asian segment rising 32%. The Global Private Banking division has also performed well, buoyed by strong brokerage and trading activity in Asia. Asset management revenues have been supported by growing assets under management, favorable market movements, and increased life insurance-related income. Moreover, rising market volatility is expected to benefit the wealth business, as more individuals seek advisory services, while brokerage and trading sectors are also likely to gain.
Is HSBC Stock Attractive?
HSBC is one of the few stocks that have appreciated in each of the last 4 years, though it has not consistently beaten the market. The stock’s returns were 21% in 2021, 8% in 2022, 39% in 2023, and 34% in 2024. The Trefis High Quality Portfolio, comprising 30 stocks, is less volatile. It has also comfortably outperformed the S&P 500 over the past 4 years. Why is that? Collectively, HQ Portfolio stocks have delivered better returns with less risk compared to the benchmark index—a smoother ride, as shown in the HQ Portfolio performance metrics. Given the current uncertain macroeconomic environment, including potential rate cuts and multiple conflicts, might HSBC face a similar scenario as in 2021 and underperform the S&P over the next 12 months, or will it see a strong surge?
There are several reasons to be optimistic about HSBC. First, its valuation appears reasonable, with the stock trading at just over 1x tangible book value (net assets minus goodwill). The bank is also focusing on improving efficiency and cutting costs, aiming for annualized savings of $1.5 billion by the end of 2026. In January, HSBC announced plans to scale back its mergers and acquisitions and certain equities businesses in Europe and the Americas, shifting its focus to more profitable Asian markets. HSBC is intensifying its commitment to capital returns, having recently announced a $2 billion share repurchase plan expected to be completed by the end of Q1 2025, which could support the stock price. Additionally, the bank is targeting a mid-teens return on average tangible equity between 2025 and 2027—above the industry average. However, despite the growth potential of its wealth division, it currently contributes only about 11% of HSBC revenues. Meanwhile, HSBC’s core net interest income remains under pressure, accounting for roughly half of the bank’s total revenue. For a closer look at what is driving our valuation for HSBC stock, see our analysis of HSBC’svaluation.
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