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HSBC Holdings reports 4.1% revenue decline in 2015

22 Feb 2016 • About HSBC Holdings ($HSBA) • By InTwits

HSBC Holdings reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • HSBC Holdings is a company in decline: 2015 revenue growth was -4.1%, 5 years revenue CAGR was -3.1%
  • HSBC Holdings has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.8%. At the same time it's a lot of higher than industry average of 12.0%.
  • CAPEX is quite volatile: 5,372 in 2015, 8,815 in 2014, 9,559 in 2013, 2,970 in 2012, 2,606 in 2011
  • The company has potentially unprofitable business model: ROIC is at 2.5%
  • It operates with high leverage: Net Debt/EBITDA is 3.4x while industry average is
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

HSBC Holdings ($HSBA) key annual financial indicators

mln. $201120122013201420152015/2014
P&L
Revenue98,96091,07983,83781,08677,769-4.1%
Net Income16,79714,02716,20413,68813,522-1.2%
Balance Sheet
Cash138,110148,835172,620134,884104,702-22.4%
Short Term Debt378,014411,992336,237267,998195,985-26.9%
Long Term Debt161,619148,940133,056122,611111,651-8.9%
Cash flow
Capex1,5051,3181,9521,4771,352-8.5%
Ratios
Revenue growth8.9%-8.0%-8.0%-3.3%-4.1%
Net Income Margin17.0%15.4%19.3%16.9%17.4%0.5%
CAPEX, % of revenue1.5%1.4%2.3%1.8%1.7%-0.1%
ROIC2.5%2.3%2.8%2.4%2.5%0.2%
ROE10.6%8.1%8.8%7.0%6.6%-0.4%

Revenue and profitability


HSBC Holdings's Revenue decreased on 4.1% in 2015.

Net Income marign increased slightly on 0.51 pp from 16.9% to 17.4% in 2015.

Capital expenditures (CAPEX) and working capital investments


In 2015 the company had CAPEX/Revenue of 1.7%. The company showed almost no change in CAPEX/Revenue from 2012 to 2015. For the last three years the average CAPEX/Revenue was 2.0%.

Return on investment


The company operates at low ROIC (2.52%) and ROE (6.64%). ROIC showed almost no change in 2015. ROE showed almost no change in 2015.

Leverage (Debt)


Debt dropped on 21.2% in 2015 while cash dropped on 22.4% in 2015.

Management team


The company's CEO Stuart Gulliver is a founder and has spent 7 years at the company. The company's CFO is Iain James Mackay. Iain James Mackay has 7 years tenure at the company.

Appendix 1: Peers in Banks


Below you can find HSBC Holdings benchmarking vs. other companies in Banks industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Banque Intl Arabe De Tunisie ($BIND)9.5%-20.2%17.3%50.2%
European Islamic Investment Bank ($EIIB)-41.8%121.2%12.6%42.3%
Tsb Banking Grp ($TSB)-3.2%-33.8%39.2%-1.4%
VTB Bank JSC ($VTBR)23.8%48.1%16.5%29.8%
Bank Audi S.A.L. ($BQAD)9.1%11.7%23.9%7.1%
 
Median (43 companies)9.5%10.2%4.8%12.1%4.0%
HSBC Holdings ($HSBA)-8.0%-8.0%-3.3%-4.1%


Top companies by CAPEX/Revenue, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Lloyds Banking Group ($LLPC)8.0%8.9%13.1%13.6%
Banco Santander Sa ($BNC)2.2%2.7%2.6%8.9%10.2%
Finansbank ($FBKD)2.0%1.9%2.8%8.5%2.7%
Tsb Banking Grp ($TSB)1.3%1.8%4.4%7.2%3.4%
Guaranty Trust Bank ($GRTB)10.0%6.7%6.1%6.8%
 
Median (40 companies)2.4%2.4%2.8%2.2%2.5%
HSBC Holdings ($HSBA)1.5%1.4%2.3%1.8%1.7%


Top companies by ROIC, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Commercial Intl Bank(Egypt)S.A.E ($CBKD)16.3%21.7%26.9%30.1%30.3%
Guaranty Trust Bank ($GRTB)14.2%19.8%18.9%17.8%
Mcb Bank Ltd ($MCBS)18.7%15.0%14.4%15.8%14.9%
Zenith Bank ($ZENB)13.8%19.0%17.6%15.0%
United Bank Ltd ($UBLS)12.6%11.7%11.8%13.8%12.6%
 
Median (43 companies)7.1%6.4%5.7%4.5%3.3%
HSBC Holdings ($HSBA)2.5%2.3%2.8%2.4%2.5%