Today, I am looking at HSBC Holdings (LSE: HSBA) (NYSE: HBC.US), and looking at whether the company can provide me with solid, bankable returns for my stocks and shares portfolio.
Asia-Pacific continues to underpin profits growth
HSBC announced in this month’s interims that although group revenues slipped 7% in the first six months of 2013, to $34.4bn, this did not prevent pre-tax profit rising strongly. This leapt 10% during the period to $14.1bn.
The bank boasts considerable strength achieved through its massive presence across the globe. Spread over 80 countries, ‘The World’s Local Bank‘ operates across the key emerging regions of Asia-Pacific — which accounts for more than 90% of profits — as well as Latin America, North Africa, the Middle East, North America and Europe.
And the business continues to report galloping activity in these developing geographies. Profits from Hong Kong and the rest of Asia-Pacific advanced 12% and 16% correspondingly, while in the Middle East and North Africa these advanced 18%.
As well, HSBC’s transformation plan continues to deliver plump rewards. Extensive cost-cutting has resulted in annualised savings of $4.1bn since 2011, and the bank has now beaten its target figure for 2013 with $800m of cost savings in the first half. And with its streamlining activities steadily making progress — the firm closed or sold off a further 11 businesses in January-June — HSBC is making massive strides in its goal to becoming an efficient earnings generator.
A fantastic all-rounder at a stunning price
City brokers expect earnings per share to recover from the 20% decline seen in 2012 and bounce 30% higher in 2013, to 62p. This is then anticipated to advance an additional 7% next year to 66p.
The bank is an attractive proposition to income investors owing to its progressive dividend policy, which is back on track after 2009’s heavy payout cut. And analysts expect payouts this year and next to yield 4.7% and 5.3% respectively, surpassing average prospective readouts of 4.1% for the banking sector and 3.2% for the FTSE 100.
HSBC was recently changing hands on a P/E rating of 11.3 and 10.5 for 2013 and 2014, which compares extremely favourably with a figure of 15.7 for the UK’s 100 biggest listed entities. In my opinion the baking institution is a fantastic pick for those seeking exciting growth drivers and in turn increasingly-attractive dividend possibilities.
Bank gains with other stellar stocks
If you are looking for other FTSE 100 winners like HSBC Holdings to bolster your investment returns, I strongly recommend you check out these recommendations from veteran fund manager Neil Woodford.
Woodford — in charge of UK Equities at Invesco Perpetual — has more than 30 years’ experience in the industry, boasts an exceptional track record when it comes to selecting stock market stars.
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> Royston does not own shares in HSBC Holdings.