Excerpt from our One Page Annotated Wall Street Journal Summary (receive it by email every morning by signing up here):
HSBC Posts a 15% Profit Rise On Growth in New Markets
Summary: HSBC Holdings PLC, the world's third largest bank, posted a 15% increase in first-half net profit to $8.73 billion, driven by strong revenue growth in new businesses and emerging markets and benefiting from lower costs. Operating income increased by the same rate to $34.33 billion. HSBC cited sustained strength in the global economy led by intense growth in China and said that it is well-positioned to benefit from shifts in the world economy. HSBC's finance director Douglas Flint said he was pleased with the firm's diversification strategy into new markets and mentioned the "outstanding" contribution from corporate investment banking. Areas of possible concern include a slowing U.S. mortgage-lending market and the U.K. unsecured-credit market. HSBC said it plans to enter Japan's retail-banking market for the first time, targeting personal-financial services, comprising traditional retail-banking products.
Comment on related stocks/ETFs: HSBC Holdings PLC (HBC) not only posted solid first-half results but emphasized what it sees as continued strength in the global economy. Regarding HSBC's desire to enter the Japanese retail-banking market however, Steven Towns, editor of Japan on SeekingAlpha questions this move. He commented that the competition is already very intense as both traditional banking institutions and investment banks are moving quickly to expand operations and cater to baby boomer money. A joint venture or equity investment might make more sense than going it alone.