HSBC (LSE:HSBA) shares have been on a hot streak in recent years. They’ve surged 55% in one year and 237% over five — and that’s before dividends.
Needless to say, that performance has left both the FTSE 100 and S&P 500 in the dust.
But even someone getting involved more recently has done well. In the past three months, this FTSE 100 bank stock is up 17.4%, turning every £10,000 invested into £11,740.
And they’d have also picked up an interim dividend last Friday (26 September), adding another £83 or so to the mix.
But that’s in the past. The question now is, might HSBC shares still be worth considering at 1,037p (very close to the all-time high)?
Operating from a position of strength
My view is yes, HSBC stock still looks attractive. It’s trading at 9.8 times forward earnings, which isn’t particularly high, despite the super-strong share price run.
Meanwhile, HSBC is still offering a 5% dividend yield. Only NatWest has a higher forecast yield among FTSE 100 banks right now. And this payout is covered more than twice by expected earnings, suggesting it will be paid (though no dividend is 100% assured, of course).
Operationally, the Asia-focused bank is performing well. In H1, revenue excluding notable items ticked up 6% to $35.4bn, while pre-tax profit increased 5% to $18.9bn. Its deposit base rose $15bn to $1.7trn, with 300,000 new-to-bank customers in Hong Kong during Q2.
It wasn’t all plain sailing, mind. Hong Kong commercial real estate remains a headache, while Q2 saw a hefty $2.1bn in dilution and impairment losses related to China’s Bank of Communications.
Management says the worst should be over regarding China’s beleaguered real estate sector. But only time will tell whether that’s the case — more risks and bad news could be lurking there.
Tariffs also add uncertainty. Reassuringly though, HSBC said it was “navigating this period of economic uncertainty from a position of strength“.
Also encouraging is that the bank continues to buy back plenty of its own shares (signalling confidence in the future). It announced an intention to repurchase another $3bn-worth, with 13% of its issued share count already bought back since Q1 2023.
Exiting low-return activities
Recently, HSBC has been restructuring to save costs, while doubling down on certain markets in Asia with higher growth prospects.
For example, it’s ditching low-return businesses, including retail banking in Bahrain and Bangladesh, with reviews ongoing in Australia, Indonesia and Sri Lanka. It will pull out of Uruguay and exit its UK life insurance operation.
At the same time, the company has opened 13 wealth centres, including mainland China, Singapore, Malaysia, and the UK. In Q2, wealth revenues jumped 22%, and it’s looking to grow the customer base in Hong Kong and Singapore.
In the current H2 period, HSBC is launching its Premier 3.0 banking service in the UAE, India, Malaysia and the US. This is aimed at affluent retail customers.
Foolish takeaway
Despite being at an all-time high, and the ongoing risks around China’s property market, I think HSBC stock continues to offer solid value. There are ongoing buybacks — which tend to be positive for the share price — and strong long-term growth prospects across Asia.
To my mind, this is a bank that’s still worth considering, especially on dips.
