My protestations of "inappropriate for me to comment" fall on deaf ears, so the questions continue. Thus, in response - but very briefly - despite the fact that the answers should really come from the experts and the current management let me say only a few words.
The results were not great, but put into context of the financial services industry they weren't that bad. Just because some analysts take a guess in advance at what the profit figure might be, and then find they have got it wrong, does not spell disaster. I believe the results were honestly reported. No clever words disguising facts.
In fact, "extreme" questions/comments raised in Hong Kong, (see last blog) that suggested The Bank's management should be pilloried for their poor performance do not seem to have been raised elsewhere - thankfully. In addition, management comments on bonuses and the fact they are foregoing their own, (quite rightly in my view), indicates a degree of morality and common sense that does not seem to have been copied by others who should know better.
Initial reports coming from the market immediately after the results announcement have included:
"As one of the better capitalised banks,HSBC's respectable profits ..."
“They are doing the prudent thing ...if you have a reputation as being the best capitalized bank in the world you want to keep it that way.”
"Even without the rights issue, capital ratios look healthy, with tier 1 ratio of 8.3% and core tier 1 of 6.8% for 2008...."
"HSBC has still made a huge profit and is strong. It has probably thrown more in the kitchen sink than it needs to. The board will forego their bonuses. It's asking investors not taxpayers for the extra cash.
After RBS, HBOS etc this is an encouraging story."It was suggested to me this evening that the large discount on offer for the rights issue seemed a little like panic, and should this not have been carried out at the same time as Standard Chartered Bank raised their capital through a rights issue? (The timing issue, by the way is a separate matter and could be up for debate). Anyway, HSBC's rights were announced at a discount of 48% to Friday's London close - and I might just remind you of this note:
"In late November, Standard Chartered announced its 1.8 billion pound ($2.69 billion at that time) rights issue at a discount of 48.7%..."
...and my personal favourite
"...the rights issue is being underwritten by Goldman Sachs and JP Morgan Cazenove, NOT Morgan Stanley who advised them to buy Household..." - and who created such a fuss a few weeks ago with their subsequently amended "scary" capital requirement figures.
The capital letters, by the way, are NOT mine!!
Of course we would all have preferred better results and a happier outcome. But, frankly, in the context of the world around us the results will do. So will the rights issue. I am not authorised to give investment advice but I can tell you that for myself - I will be taking up mine!!
And as the final word on the subject of HSBC, may I assure anyone who comes across the comment I saw a few minutes ago at the bottom of one of the newspaper "blogs" which read:
"Stuff the Hong Kong and Shanghai Bank ...HSBC is now a greedy bank. David, Hong Kong"
It wasn't me!
Dear David,
Your blog is very aspiring and I am sure many investors for HSBC will share your words of wisdom. I just watched the movie Pianist and the term 'financial terrorism' just pop into my mind. The pianist was clutching onto a can of juice for food, totally helpless and it reminds me that thousands of investors are doing the same thing when they see their investment in HSBC shrink so quickly, in spite of the bank's still very strong financials.
YB
Posted by: yb yeung | 08 March 2009 at 12:36