HSBC (LON: HSBA) share price has gone vertical this year, a move that has pushed it to its all-time high. The stock surged to a high of 657p on Wednesday, meaning that it has jumped by over 183% from its lowest point in 2020.
Why HSBC stock is surgingHSBC stock price has done well in the past four years, helped by the company’s turnaround efforts. The surge is also in line with other European banks like Unicredit, Lloyds, and ING Group.
The primary reason for the jump is that the company is thriving in the era of high-interest rates. Its most recent financial results revealed that the company’s profit before tax surged to over $30.3 billion in 2023, up from $17.1 billion in 2022.
The company’s revenue soared to $66.1 billion in 2023, up from $50.6 billion a year earlier. These numbers are mostly because high-interest rates pushed the net income profit sharply higher during the year.
As a result, the company returned substantial sums of money to its shareholders. It announced buybacks worth over $9 billion and much more in dividends. These repurchases have helped it to reduce the number of outstanding shares to 19.26 billion, down from over 20.4 billion in 2021.
HSBC has a room to boost its returns to shareholders as its CET 1 Capital Ratio stands at 14.8%. This figure has room to drop considering that most of its American peers have a ratio of less than 13.5.
HSBC has also streamlined its business in the past few years by exiting some non-core markets. This week, it announced that it would exit the Argentinian market, which is facing hyperinflation.
HSBC completed the sale of its Canadian business to RBC in a $9.6 billion deal. It has also exited its retail operations in the US, where it struggled to compete with the likes of Bank of America and JPMorgan. It also sold its French business to Cerberus for $2.3 billion.
Exiting these markets is an important move for the company since it is helping it streamline its operations by focusing on the most profitable businesses.
Fundamentally, there is a likelihood that the company will continue doing well even when central banks start slashing interest rates in the coming months. Besides, the company still maintains an attractive 7.20% dividend yield.
HSBC share price forecast
The weekly chart shows that the HSBC stock price has been in a strong bullish trend in the past four years. It rose from the 2020 low of 232.50p to over 658p. The stock has remained above all moving averages and the crucial resistance point at 630p, its highest swing in October last year.
The outlook for the HSBC share price is still bullish, with the next point to watch being at 700p. Before that happens, the stock could retreat and retest the key support at 630p initially.
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