Overview of the results of the banking giant HSBC

So far this year, HSBC has done better on the stock market than most of its competitors in the UK and Europe. Can it keep going in a tougher year for banks?

When will HSBC release its first quarter 2022 results

The London and Hong Kong-listed bank HSBC will announce its first quarter results on Tuesday, April 26 at 12:00 a.m. (EST).

The first major London-listed bank to report results will be HSBC. Lloyds will report on April 27, Barclays on April 28, and NatWest will finish up on April 29.

Overview of HSBC’s results for the first quarter of 2022

HSBC said earlier this year that it would go into 2022 with “good business momentum” in most areas and expects mid-single-digit growth in lending in all areas, but it warned that its Wealth division in Asia would do poorly in the first quarter. Since then, the economic outlook has changed a lot, and investors will want to know that they are still optimistic about 2022.

Analysts expect HSBC’s adjusted revenue to drop by 4 percent from the same time last year to $12.7 billion in the first quarter of 2022. They also expect its reported after-tax profit, which is a measure of its core earnings, to drop from $4.6 billion to $2.9 billion. The release of provisions that had been made during the pandemic led to a huge increase in the bank’s profits the year before. This was worth billions of dollars.

Notably, HSBC had increased profits by releasing reserves for three consecutive quarters. It said it had built up reserves by setting aside $500 million in the fourth quarter of 2021 to reflect the increased risk posed by China’s commercial real estate sector. Analysts think it will add another $860 million to reserves in the first quarter of 2022 as more risks weigh on the global economic outlook. HSBC’s confidence in the future can be judged by how it deals with its reserves. When things are uncertain, the bank moves cash out of its treasuries and puts it back in when things get better. The latest round of reservations was caused by the uncertainty caused by the pandemic, but this year’s headwinds are very different and are dominated by how inflation, supply chain headwinds, the Russian-Ukrainian conflict, and new outbreaks of Covid-19 in China are weighing on the ability of the global economy to bounce back after two chaotic years.

HSBC’s response to rising costs, which are affecting the whole banking industry, will also get a lot of attention. In the first quarter, operating costs are expected to be $8.9 billion, which is more than 4% more than the same time last year. Analysts at Bloomberg Intelligence say that this will be just below the “critical $9 billion level,” which means that any number above this could hurt the bank’s ability to keep costs down.

HSBC is trying to stop costs from going up by coming up with a plan that will save $2 billion a year by 2022, but will cost $3.4 billion all at once. He said that he thinks that will change in 2023, when he thinks spending will go up by 0% to 2%. Notably, HSBC’s net interest margin, which is a key indicator of profitability, is expected to hit 1.24 percent in the first quarter. This will be its best performance in seven quarters.

One of the main things that should help banks make more money this year is that interest rates are going up as central banks try to stop inflation from getting out of hand.

In the meantime, the markets will focus on what loan growth might look like this year, as growth expectations continue to fall because of inflationary pressures on the global economy, and how quickly revenues might rise compared to rising costs.

HSBC raised its dividend from $0.15 in 2020 to $0.25 in 2021. This was possible because the bank made a lot of money in 2020 and could give more money back to shareholders. HSBC is also adding buyouts to this. Last quarter, it said it would start a new $1 billion program once the current $2 billion buyout was done. It also said that shareholder returns would be a key factor in how the markets would react to the upcoming results and would be another way to see how HSBC felt about its future.

What’s next on the stock market for HSBA shares?

In the European banking market in 2022, HSBA shares have done very well. Since the beginning of the year, the stock has gone up more than 13% on the stock market, while Barclays has gone down more than 23% and its British competitors Lloyds and NatWest have seen their shares go down by 6% and 3%, respectively. At the same time, both the STOXX Europe 600 index and the MSCI Europe Banks index went down by more than 4%.

HSBA shares have been rising in an uptrend for more than six weeks, but this trend has lost steam since early April. This week, when the shares tried to break above the 538 threshold but failed, we saw a possible new high. On the other hand, the 50-day moving average, which was recently at 519, should be seen as the stock’s first bottom.

HSBC (LSE: HSBA) Daily Chart

Tradingview and Stone X

If HSBA shares can break above the initial high, we could see a quick move to the next upside target of 548. After that, it may start to aim for a new post-pandemic high that is higher than the February high of 567.

The RSI is still in the “bullish” zone. This is because the average number of trades has gone up over the past 10 days, and the short-term moving averages continue to move away from the longer 200-day moving average.

Notably, the 22 brokers who follow the stock think that HSBA shares could go up more than 10% on the stock exchange in the next year and hit 587.

The stock has gone down since it hit its initial high, and if the initial low doesn’t hold, it could go back down to 514p. A break below here would be more important because it would open the door below 503 and the 100-day moving average SMA, which is just below 500.

If HSBC’s outperformance this year falls apart, its stock price could go down to its low in 2022, near 460, and then to its 200-day moving average SMA.