The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.
In November, HSBC reported third-quarter profits of $4.53 billion, up 30% from the same period in 2012. The figure came in below analysts’ estimates of $5.54 billion; the share price has dropped over 6% since the announcement. The increase in third-quarter profit was attributed to cost-cutting, fewer impairments on loans and increased focus on the Far East.
HSBC is in a much stronger position than other British banks like Lloyds or Royal Bank of Scotland, as it didn’t over extend during the UK property boom. That being said, the bank has a large amount of exposure to Latin America which could prove costly given the uncertainty in Argentina.
If the bank puts aside more funds as a contingency for fines in relation to manipulation of the foreign exchange market, we could see the share price take a hit.
The consensus for fourth-quarter profits is £4.06 billion, but I would pay close attention to the potential write-downs in South America and provisions for fines from regulators.
The trend-line over the past 26 months is providing support at 618p, which has been a key level over the past decade. A drop below 618p could push the share price below 600p.
The stock is hitting resistance at 690p and if we break through it the next target would be 708p.