HSBC remains long term pick for income seekers

As HSBC reports Q3 results Graham Spooner, investment research analyst at The Share Centre, explains what it means for investors.

“HSBC reported a mixed set of results this morning, which were dominated by an increase in provisions and higher costs, largely as a result of regulatory demands. Overall the results were slightly below expectations with pre-tax profit for the period down 12%. However, positive performance in its global banking and commercial banking divisions helped offset some of this.

“We continue to suggest income seeking investors ‘buy’ for the longer term and build a holding over time by drip feeding into the stock. HSBC has remained a significant dividend payer and though progress may be slow, we believe the shares could be a better option than other banks. HSBC is viewed as more conservatively managed with a superior balance sheet and deposits.

“The CEO's three year plan includes a return on equity target of 12-15% which it aims to achieve through cutting significant parts of its US operations, along with other businesses around the world. The business plan also concentrates on organic growth from a few key areas that trade heavily with each other.”