10th August 2015
Graham Spooner, investment research analyst at The Share Centre, explains why he has HSBC shares on his ‘buy’ list…
In a sector that has remained generally out of favour with investors, HSBC could have long-term attractions for those prepared to dip their toe again.
Management has recently come under criticism as the bank struggles to boost profitability amid heightened regulatory costs. However, the group has been working hard to make the bank more manageable and streamlined, and investors should be encouraged by the changes being made.
The group reported its second quarter results this month which were slightly ahead of market expectations and there was encouraging profit growth in its Asian business of around 20%.
Furthermore, the announcement of the $5.2bn sale of its Brazil business demonstrates to investors that it is enforcing its strategy of reducing its operations around the globe, allowing the bank to concentrate more on organic growth.
As our preferred choice in the banking sector, HSBC has remained a significant dividend payer, despite banks as a whole having been hit hard in recent years. Although progress may continue to be slow, we feel that these shares could be a better option than other banks.
They are viewed as being more conservatively managed with a superior balance sheet and deposits. We currently view HSBC as a long term ‘buy’ for low to medium risk investors with income as their main objective.