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Is HSBC or Standard Chartered the better bank stock to own?

Posted on 05 March 2013 with no comments from readers

The two largest Asian-focused UK banks, HSBC and Standard Chartered published their financial results yesterday. However, HSBC shares are up 27 per cent in the past year against revenues falling across the board and a 5.5 per cent lower group profit. Standard Chartered by comparision delivered a 10th year of rising record profits and a higher internal rate of return.

In the Middle East HSBC posted a 9.5 per cent fall in profits to $1.35bn in 2012, due to much lower income from investment banking and a $85m investment loss on an unnamed subsidiary. The bank sold its private equity arm in the year, exited Pakistan and scaled back Amanah Finance, but bought the Lloyds TSB operation in the UAE and expanded in Oman.

Oil State commitment

Clearly the bank still has its priorities in the Oil States where growth prospects are still highest in a troubled global economy, with one of those problems being the high cost of oil. Standard Chartered Bank is of course also heavily committed to the region.

Whether either stock is a buy after substantial gains in their share price recently is questionable and depends on how you see the prospects for a global economic recovery. We think Wall Street is far too optimistic at the moment and pricing in a recovery that is just not happening. How can a global bank like HSBC be showing revenue declines across the board and the world economy be picking up?

Mizuho’s Jim Antos dicussed HSBC’s full-year earnings with Susan Li on Bloomberg Television…

Posted on 05 March 2013 Categories: Banking & Finance, GCC Economics, Investment Gurus, Video Channel

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