Two Banking Stocks In Focus: HSBC Holdings PLC And Lloyds Banking Group Plc

  • October 23, 2019 04:55 PM BST
  • Team Kalkine
Two Banking Stocks In Focus: HSBC Holdings PLC And Lloyds Banking Group Plc
HSBC Holdings PLC

The United Kingdom-based group HSBC Holdings PLC (Identifier: HSBA) provides banking and financial services across the globe. The company is home to various banking products and business operations which are spread across Latin America and North America, Asia, Europe, North Africa, and Middle East. The company’s operations are divided into four segments: Global Private Banking (GPB), Commercial Banking (CMB), Retail Banking & Wealth Management (RBWM), and Global Banking & Markets (GB&M).

HSBA-Recent News

On 2nd October 2019, the company declared an interim dividend for the third time in 2019 of US$0.10 per share, which will be payable on 20th November 2019 to the shareholders. In addition, the company has provided the shareholders with an option to subscribe to the scrip dividend (new shares at a market value of US$7.7133) instead of receiving the dividend in cash.

HSBA-Financial highlights for H1 FY19

The company’s reported profit before tax increased by 15.8 per cent to US$12.4 billion as compared to US$10.7 billion in H1 2018. Adjusted profit before tax surged from US$11.7 billion in H1 FY18 to US$12.5 billion in H1 FY19. Reported profit after tax was up by 18.1 per cent to US$9.9 billion against the US$8.4 billion in the half-year of the financial year 2018.

Reported revenue rose by 7.6 per cent and adjusted revenue climbed by 8 per cent, due to an increase in RBWM and CMB. Adjusted revenue was down by 3 per cent in GB&M, which suffered from lower market activity driven by the ongoing economic uncertainty and spread compression.  Investments stood at US$2.2 billion in H1 2019, an increase of 17 per cent as compared to H1 2018 data.

Basic and diluted earnings per share increased by 16.67 per cent to US$0.42 as compared with the H1 2018 figure of US$0.36. Returns on average tangible equity surged by 150 bps to 11.2 per cent against the 9.7 per cent in H1 FY18. The Net Interest Margin decreased from 1.66 per cent in H1 2018 to 1.61 per cent in H1 2019. Common equity tier 1 ratio improved by 30bps to 14.3 per cent as on 30 June 2019 compared to 14% recorded on 31 December 2018. An interim dividend per share was declared at US$0.31. The company intend to initiate a share buy-back programme of up to US$1 billion shortly.

The company is gearing up for the UK’s exit from the EU and to provide continuity of services to all the clients based in the UK and Europe. The company will stay alert to the downside risks to shareholder interests particularly with respect to international trade tensions and future movement of loan costs.

The rising interest rate can help the company to improve its margins but can reduce the demand for loan. The company intends to remain alert and pursue a proactive approach to managing the cost base. The company will have to remain watchful of political and economic uncertainties around the world. Digital transformation, the emergence of Fintech, growing cards and payments channels in the UK, and expansion initiatives in China may offer new growth opportunities.

HSBA-Share price performance

Daily Chart as on 23-October-19, before the market closed (Source: Thomson Reuters)

On 23rd October 2019, while writing at 12:55 PM GMT, HSBC Holdings PLC shares were clocking a current market price of GBX 607.20 per share, down 0.52 per cent in comparison to the last traded price of the previous day. The company’s market capitalisation was at £124.50 billion at the time of writing.

On 3rd May 2019, the shares of HSBA have touched a new peak of GBX 687.70 and reached the lowest price level of GBX 578.20 on 28th August 2019 in the last 52 weeks. The company’s shares were trading at 11.70 per cent lower from the 52-week high price mark and 5.01 per cent higher the 52-week low price mark at the current trading level as can be seen in the price chart.

The stock’s traded volume was hovering around 6,182,610 at the time of writing before the market close. The stock’s 5-day average daily traded volume was 23,543,964.40; 30 days’ average daily traded volume- 25,132,429.70 and 90 days’ average daily traded volume – 24,501,578.40. The volatility of the company’s stock was higher as compared with the index taken as the benchmark, as the beta of the company’s stock was recorded at 1.04.

The shares of the company have delivered a negative return of 7.88 per cent in the last quarter. The company’s stock plunged by 5.64 per cent from start of the year to till date. The company’s stock has given investors 2.20 per cent of negative return in the last year.Â

Sector: Banks

Lloyds Banking Group Plc

Lloyds Banking Group Plc (Identifier: LLOY) is a London-based lender and offers a wide variety of banking and non-banking services predominantly in the UK. The group offer services related to current and savings accounts, short and long-term loans, credit and debit cards, unsecured loans, investment products, mortgages, motor finance, protection, bonds and syndicated loans. The company's operations are differentiated into four operating segments being the Commercial Banking segment, Insurance segment, Retail segment, and Consumer Finance segment.

LLOY-Financial highlights for H1 FY19

The company delivered a strong underlying profit of £4.2 billion in first half of the fiscal year 2019. The company’s net interest margin dipped by 3 basis points to 2.9 per cent in first half of financial year 2019 compared to that in the same period of 2018. The company’s cost to income ratio dipped by 1.8 percentage points to 45.9 per cent in H1 FY19 compared to that in H1 FY18. The company’s statutory ROE (Return on Equity) was down by 0.6 percentage points to 11.5 per cent in H1 FY19 compared to that in H1 FY18.  The company’s interim dividend was up by 5 per cent to 1.12 pence per share in H1 FY19 compared to the corresponding year-ago period.

LLOY-Share price performance

Daily Chart as on 23-October-19, before the market closed (Source: Thomson Reuters)

On 23rd October 2019, while writing at 01:01 PM GMT, Lloyds Banking Group Plc shares were clocking a current market price of GBX 60.04 per share, flat in comparison to the last traded price on the previous day. The company’s market capitalisation was at £42.30 billion at the time of writing.

On 23rd April 2019, the shares of LLOY have touched a new peak of GBX 67.90 and reached the lowest price level of GBX 48.16 on 15th August 2019 in the last 52 weeks. The company’s shares were trading at 11.57 per cent lower from the 52-week high price mark and 24.66 per cent higher the 52-week low price mark at the current trading level as can be seen in the price chart.

The stock’s traded volume was hovering around 66,656,301 at the time of writing before the market close. The stock’s 5-day average daily traded volume was 273,775,377.00; 30 days’ average daily traded volume- 188,309,918.23 and 90 days’ average daily traded volume – 164,944,156.10. The volatility of the company’s stock is lower as compared with the index taken as the benchmark, as the beta of the company’s stock was recorded at 0.68.

The shares of the company have delivered a positive return of 6.51 per cent in the last quarter. The company’s stock surged by 16.51 per cent from start of the year to till date. The company’s stock has given investors 7.05 per cent of positive return in the last year.Â

 

 


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