HSBC’s share price has been in a steep sell-off over the past few months, mirroring the weakness across other European banks. After peaking at 1,608p in August, the stock has fallen to 1,365p, wiping out billions of pounds in market value. With earnings approaching, the question is whether the slide will continue or the shares will rebound.
HSBC announces new share buyback as growth continues
HSBC stock will be in the spotlight after the company published relatively strong financial results. Its revenue rose to $18.6 billion in the third quarter, up from $17.8 billion in the same period last year. Its pretax profit rose to $9.63 billion, largely in line with the expected $9.69 billion.
HSBC’s profit before tax rose 32% to $9.6 billion, reflecting the absence of $1.4 billion in legal provisions it recorded last year. Also, the company benefited from lower legal fees and credit losses.
The revenue growth happened as its net interest income jumped by 6%, while its corporate and institutional banking fees continued rising. Most notably, the company continued benefiting from its wealth management business.
HSBC expects that its business will continue doing well, with management expecting its banking net interest income to be at least $46 billion this year. It also expects the average tangible equity of 17% or higher for 2026 through 2028. In a statement, Georges Elhedery, the CEO said:
“Our performance shows that in a more complex world clients continue to turn to us to navigate uncertainty and seize new opportunities. It also reflects consistent execution of our strategic priorities with pace, precision, and discipline.”
HSBC continued returning cash to investors and as it announced a $1 billion, a move that will continue reducing the amount of its outstanding shares in the UK and Hong Kong. Share repurchases help companies to boost their earnings-per-share over time.
HSBC has numerous catalysts
HSBC’s business is benefiting from several major themes. Interest rates have remained stable in its key markets have continued rising this year, boosting its interest income.
The company has also continued slashing its costs as it embraces the use of artificial intelligence tools. Earlier this month, the Reuters reported that it would slash about half of management and specialist roles in the wealth business in the UK. In total, it has shed thousands of jobs in the past few months.
The company is also seeking to benefit from the wealth management boom in China, a country it has a large presence in.
HSBC share price technical analysis
HSBC stock chart | Source: TradingView
The daily chart shows that the HSBC stock has slumped in the past few months. It dropped from a high of 1,608p in August to the current 1,365p. It has remained above the ascending trendline that links its lowest levels since October last year. The current price also remains above the 200-day Exponential Moving Average (EMA).
On the other hand, the Average Directional Index (ADX) has continued rising to 31.52, its highest level since July 16. A rising ADX is a sign that the downward trend is gaining steam. Also, the Relative Strength Index (RSI) has continued falling.
Therefore, there is a risk that the stock will continue falling, potentially to the psychological level of 1,200p. The stock will then bounce back in the coming weeks as investors rotate back to European banks.
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