HSBC: Gulliver's Adventure

HSBC: Let’s face it, navigating bank results is like sailing a dinghy through an ice floe....in the dark. You get lots of large numbers, which are often many miles away from the underlying movement of pound notes, moving around and threatening to crush shareholders’ equity. HSBC has its fair share of historical issues including poor money-laundering controls in Mexico, a poor record in North American consumer lending and a good whack of PPI compensation to pay. But it is huge (the market capitalisation is £122bn, roughly the size of Hungary’s GDP) and its balance sheet is strong with core tier 1 a comfie 11.3%. It has a good footprint in Asia, which will see good economic growth over the long timeframes that corporate super-tankers like to think in. The CEO, Stuart Gulliver, has re-iterated that they have a strong balance sheet and a progressive dividend policy, although they declare results and dividends in US dollars. This means that with a strong pound against the dollar at the moment, sterling dividends received face a headwind. So you start with a historic yield is 4.7%, for a bank in some of the right places, which is more alluring than many of its peer group navigating the icy financial ocean.

These comments are not a personal recommendation to deal. Any investments can fall as well as rise in value, so you could get back less than you invest. I may have a financial interest in some of the stocks written about.