HSBC Holdings (LSE:HSBA) shares have been one the stars of the FTSE 100 index due to its prolonged bullish journey. Currently trading at 643p, HSBC Holdings shares have consistently risen since hitting the low of 283.35p in September 2020. The stock has appreciated by a whopping 125% ever since. And in the year 2023 alone, the stock has shown a 20% increase.
Going forward, let’s explore if HSBC Holdings shares are still worth buying.
- In the year 2023, HSBC Holdings’ share has appreciated by 20% as of September.
- The London-based financial company plans to heavily invest in the energy transition trend.
- I am pretty optimistic about the future of HSBC Holdings shares.
What does HSBC Holdings do?
HSBC Holdings plc is a British multinational bank and financial services holding company. With more than 4,000 offices, the company operates in more than 70 countries around the globe.
Listed on the London, Hong Kong, New York, and Bermuda stock exchanges, shares in HSBC Holdings Plc are held by around 180,000 shareholders in 126 countries. HSBC Holdings has a market capitalization of £125bn. More than 40,000 shares of the financial services company are traded on the London Stock Exchange daily.
How do the financials look?
HSBC Holdings remains focused on continuing to improve our performance and maintaining tight cost discipline. The strong first quarter performance provides further evidence that their strategy is working.
Revenue increased by 64% to $20.2bn, and Profit before tax rose by $8.7bn to $12.9bn. Furthermore, Net interest margin was reported to be 1.69%, which increased by 50 basis points compared with the first quarter of 2022.
The company remembers its shareholders and its commitment to them. The Board has approved a first interim dividend of $0.10 per share. Moreover, they also plan to initiate a share buy-back of up to $2bn.
The bull case for the HSBC Holdings share price
The London-based financial company plans to heavily invest in the energy transition trend1. HSBC plans to allocate $1bn in financing to support emerging climate-tech companies around the world in a push to help reduce carbon emissions. The financing is expected to support start-ups in EV charging, battery storage, sustainable food and agriculture, and carbon removal technologies.
They also plan to invest $100m in Breakthrough Energy Catalyst, a separate platform that funds and invests in firms using emerging technologies to transition to cleaner sources of energy.
In addition to the above-mentioned projects, HSBC has also launched a new climate-tech venture capital strategy, which aims to invest in early-stage companies dedicated to achieving a net-zero transition.
The bear case for the HSBC Holdings share price
Amongst other risks like regulatory, operational, and reputational risks, one of the newest challenges the financial company is facing is “greenwashing”. In fact, HSBC Holdings has recently added it to a list of risks that could affect the bank’s access to capital markets.
The bank has stated that if it’s perceived to mislead stakeholders about its business activities or fails to achieve its stated net-zero ambitions, it could face greenwashing risk, resulting in significant reputational damage, impacting its revenue-generating ability and potentially its access to capital.
HSBC Holdings Share price prediction
HSBC holdings shares have been on the rise for the past three years. while this makes investors happy, analysts are intrigued and apprehensive at the same time over the future of the banks’ stock.
The majority of the analysts have a positive outlook with a buy stance on the HSBC Holdings share. The price forecast is, for the next 12 months, set at 787.6p with a high estimate of 1,000p and a low estimate of 580p. If accurate, this suggests that today’s valuation may be an attractive entry point for my portfolio. But as always, analyst forecasts have an element of inaccuracy. Therefore, investors shouldn’t make decisions based solely on share price predictions.
Should I buy HSBC Holdings shares today?
Personally, I’m pretty optimistic about the future of HSBC Holdings shares. And I plan on adding them to my portfolio once I have more capital at hand.
But with every stock investment, uncertainty always hangs in the air. Banking and financial businesses have a history of being cyclical. So, while I plan to add this stock to my portfolio, I will keep a watchful eye on the overall banking sector and the stock market cycles.
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Saima Naveed does not own shares in any of the companies mentioned. The Money Cog has no position in any of the companies mentioned. Views expressed on the companies and assets mentioned in this article are those of the writer and, therefore, may differ from the opinions of analysts in The Money Cog Premium services.