HSBC 2007 full year result
5 March, 2008, 3:43. Posted by Zarathustra
Tags: HSBC
In fact they have announced their results for two days, but I still want to say something.
HSBC is among the first financial institutions to warn about the seriousness of subprime issue in US, and it was the first group of financial institutions who made provision for the bad loans related to subprime. HSBC exposed itself to subprime through subsidiary HSBC Finance in US, which was formerly Household International, which it acquired years ago. Unlike many other banks like UBS which exposed itself to subprime primarily by buying MBS, CDO and other similar kinds of fixed income securities, HSBC is actually the one who lend the money out. In such a case, the bank probably have more power to re-negotiating the terms of debt to prevent default. As for banks like UBS, they are not even possible to know who are the house owners underlying the securities they bought.
Anyway, HSBC has delivered a result which was better than expected. While most of the financial institutions with subprime exposure has suffered loss or decreasing profit, HSBC’s net increased with a respectable 21%. Their businesses in emerging markets were doing so well that offset the loss in US.
HSBC, The Hongkong and Shanghai Banking Corporation if in full, has a great presence in Hong Kong, with a significant weights of business here. In the few bad years after the 1997 Asian Financial Crisis, HSBC did not suffer any loss even though they have so much business here. The weight of their US business is relatively small, so I could not really think of any reason why people think that HSBC would be hit badly by the subprime. Anyway, the result prove to public about the effectiveness of HSBC management in navigating in this environment.
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About Zarathustra
Zarathustra: Founder and Managing Editor of Also sprach Analyst. Once an analyst, now an investor and entrepreneur. Based in Hong Kong, but Londoner at heart.