LONDON — There are things to love and loathe about most companies. Today, I’m going to tell you about three things to love about Britain’s biggest bank, HSBC Holdings plc (ADR) (NYSE:HBC).
I’ll also be asking whether these positive factors make this FTSE 100 giant a good investment today.
HSBC is a banking behemoth. Capitalized at 135 billion pounds, the group is over three times the size of Standard Chartered, Barclays, and Lloyds, and over six times the size of Royal Bank of Scotland.
During the financial crisis, while the other U.K. banks were saved by the tax payer (RBS and Lloyds), the Qataris (Barclays) and the happy accident — on this occasion at least — of having minimal exposure to the U.S. and Europe (Standard Chartered), HSBC had its sheer size and stature as one of the world’s most strongly capitalized banks.
Geographical diversification
None of HSBC’s Footsie banking peers can match the group for geographical diversification. The table below shows how well balanced the group’s global-revenue footprint is:
| Region | % of revenue |
|---|---|
| Europe (including U.K.) | 33 |
| The Americas | 32 |
| Asia-Pacific | 31 |
In contrast, HSBC’s rivals are all relatively reliant on one region for their revenue: the U.K. in the case of Lloyds (91%), RBS (67%), and Barclays (48%); and Asia-Pacific in the case of Standard Chartered (60%).
Brand strength
Brand Finance has produced a league table of the world’s best banking brands each year for the past seven years. HSBC has never been out of the top three and has been awarded the accolade of the world’s most valuable banking brand on four occasions.
Other brand-ranking organisations — such as BrandZ, Forbes, and Interbrand — likewise rate HSBC as a top global bank brand. Brand strength is a great asset, and HSBC has it in spades.
A good investment?
Based on forecasts for 2013, and a recent share price of 729 pence, HSBC trades on 11.6 times earnings, which is below the market average and below all of its Footsie banking peers with the exception of Barclays. When it comes to dividend yield, HSBC’s higher-than-market-average 4.2% beats all the other banks bar none.
However, HSBC’s sector-leading yield was not appealing enough to qualify the share for this exclusive in-depth report, which is devoted instead to a higher-income opportunity within another sector of the FTSE 100.
In fact, this alternative opportunity offers a prospective 5.9% yield, might be worth 850 pence versus around 700 pence now — and has just been declared the “Motley Fool’s Top Income Stock for 2013.”
The article 3 Things to Love About HSBC Holdings originally appeared on Fool.com and is written by G. A. Chester.
G. A. Chester does not own shares in any of the companies mentioned in this article.
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