LONDON -- The U.K.'s biggest bank, HSBC Holdings (HSBA 1.34%) (HSBC 1.03%), is set to release its annual results on Monday this coming week (4 March).
Don't expect to see the announcement on your regulatory newsfeed at 7 a.m.; as usual, HSBC has scheduled the release for 8.15 a.m.
At the time of writing, the shares of this 135 billion-pound banking behemoth are trading at 730p -- up 27% from a year ago compared with a 7% rise in the FTSE 100.
How will HSBC's business have performed in 2012 compared with last year? And will the results justify the strong performance of the shares? Here's your cut-out-and-check results table!
| FY 2011 | Forecast FY 2012 | Forecast FY growth | |
|---|---|---|---|
| Net operating income* | $72.28bn | $69.58bn | -3.7% |
| Profit before tax (£bn) | $21.87bn | $23.15bn | +5.9% |
| Earnings per share (EPS) | $0.92 | $0.87 | -5.4% |
| Dividend per share | $0.41 | $0.44 | +7.3% |
| Net asset value (NAV) per share | $8.48 | $9.15 | +7.9% |
Sources: HSBC annual report, HSBC-provided consensus as at 31/1/13, Thomson Reuters. *Before loan impairment charges and other credit-risk provision.
Operating income and profit
Analysts are forecasting a decline of approaching 4% in net operating income, but an increase in profit before tax of around 6%, helped by lower loan-impairment charges -- forecast to drop to $8.5bn from over £12bn in 2011.
Cost cutting is part of HSBC's strategy to improve profits, and at the nine-month stage, the company reported sustainable cost savings in Q3 of $0.5bn, bringing total annualised savings to $3.1bn. The board said it now expects to exceed its target range of $2.5bn to $3.5bn by the end of 2013.
EPS, dividend, and NAV
Despite the forecast rise in profit before tax, the City is expecting EPS to fall by over 5%. This is due to lower bottom-line profit as analysts have pencilled in an effective tax rate of 24-25% compared with 18% in 2011.
Still, good news on the dividend is expected. Forecasts are for an increase in the full-year dividend of over 7%, almost twice covered by earnings.
HSBC has paid a dividend of $0.09 in each of the first three quarters of 2012 (the same as in 2011). If analyst forecasts for the full-year payout are on the button, look out for a Q4 dividend of $0.17 in the upcoming results -- a rise of over 20% on the $0.14 paid out in Q4 2011.
Assets are also expected to show a rise. Consensus estimates suggest an increase in NAV per share of around 8% to $9.15 from $8.48 in 2011.
Value
Converting the U.S. dollar forecasts to sterling at today's exchange rate of 0.765, gives EPS of 66.5 pence, a final dividend of 13 pence to add to the 16.9 pence paid in the first three quarters (so around 30 pence for the full year), and a NAV per share of 700 pence.
At a share price of 730 pence, HSBC is trading on 11 times earnings, at a premium of around 4% to NAV and offers a dividend yield of a shade over 4%.
All those metrics are at "value" levels relative to the FTSE 100 averages, but whether they are truly value largely depends on your view of the likelihood of further shockwaves to the financial system.
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