HSBC Holdings Net Income dropped on 81.7% in 2016 and Revenue dropped on 18.4%
21 Feb 2017 • About HSBC Holdings (
$HSBA) • By InTwits
HSBC Holdings reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- HSBC Holdings is a company in decline: 2016 revenue growth was -18.4%, 5 years revenue CAGR was -8.5%
- HSBC Holdings has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.8%. At the same time it's a lot of higher than industry average of 19.8%.
- CAPEX is quite volatile: 3,048 in 2016, 5,372 in 2015, 8,815 in 2014, 9,559 in 2013, 2,970 in 2012
- The company has potentially unprofitable business model: ROIC is at 0.8%
- It operates with high leverage: Net Debt/EBITDA is 4.0x while industry average is
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
HSBC Holdings ($HSBA) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 91,079 | 83,837 | 81,086 | 77,769 | 63,459 | -18.4% |
| Net Income | 14,027 | 16,204 | 13,688 | 13,522 | 2,479 | -81.7% |
Balance Sheet
|
|---|
| Cash | 148,835 | 172,620 | 134,884 | 104,702 | 133,012 | 27.0% |
| Short Term Debt | 411,992 | 336,237 | 267,998 | 195,985 | 213,630 | 9.0% |
| Long Term Debt | 148,940 | 133,056 | 122,611 | 111,651 | 86,899 | -22.2% |
Cash flow
|
|---|
| Capex | 1,318 | 1,952 | 1,477 | 1,352 | 1,151 | -14.9% |
Ratios
|
|---|
| Revenue growth | -8.0% | -8.0% | -3.3% | -4.1% | -18.4% | |
| Net Income Margin | 15.4% | 19.3% | 16.9% | 17.4% | 3.9% | -13.5% |
| CAPEX, % of revenue | 1.4% | 2.3% | 1.8% | 1.7% | 1.8% | 0.1% |
| ROIC | 2.3% | 2.8% | 2.4% | 2.5% | 0.8% | -1.7% |
| ROE | 8.1% | 8.8% | 7.0% | 6.6% | 0.7% | -5.9% |
Revenue and profitability
HSBC Holdings's Revenue dropped on 18.4% in 2016.
Net Income marign dropped on 13.5 pp from 17.4% to 3.9% in 2016.
Capital expenditures (CAPEX) and working capital investments
HSBC Holdings's CAPEX/Revenue was 1.8% in 2016. HSBC Holdings's CAPEX/Revenue decreased slightly on 0.51 pp from 2.3% in 2013 to 1.8% in 2016. It's average CAPEX/Revenue for the last three years was 1.8%.
Return on investment
The company operates at low ROIC (0.82%) and ROE (0.71%). ROIC decreased slightly on 1.7 pp from 2.5% to 0.82% in 2016. ROE decreased on 5.9 pp from 6.6% to 0.71% in 2016.
Leverage (Debt)
Debt decreased on 2.3% in 2016 while cash jumped on 27.0% in 2016.
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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Kazkommertsbank JSC ($KKB) | | 6.0% | 16.3% | 41.4% | |
| Sberbank Of Russia ($SBER) | 37.2% | 25.1% | 23.4% | 27.4% | |
| Commercial Intl Bank(Egypt)S.A.E ($CBKD) | | 23.7% | 18.9% | 26.8% | 27.0% |
| Yapi Ve Kredi Bankasi As ($YKBD) | | 4.8% | 19.7% | 25.3% | 17.8% |
| Mcb Bank Ltd ($MCBS) | | -1.7% | 19.4% | 22.4% | -10.7% |
| |
|---|
| Median (43 companies) | 21.7% | 4.8% | 12.1% | 5.5% | 4.2% |
|---|
| HSBC Holdings ($HSBA) | | -8.0% | -3.3% | -4.1% | -18.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Banque Marocaine Du Comm Exterieur ($69IR) | 3.7% | 9.7% | 4.3% | 26.8% | |
| Lloyds Banking Group ($LLPC) | 8.0% | 8.9% | 13.1% | 13.6% | 14.5% |
| Banco Santander Sa ($BNC) | 2.7% | 2.6% | 8.9% | 10.2% | 9.1% |
| Guaranty Trust Bank ($GRTB) | 6.7% | 6.1% | 6.8% | 7.7% | |
| Diamond Bank ($DBPA) | 8.2% | 7.9% | 6.0% | 6.7% | |
| |
|---|
| Median (41 companies) | 2.4% | 2.8% | 2.2% | 2.5% | 1.9% |
|---|
| HSBC Holdings ($HSBA) | 1.4% | 2.3% | 1.8% | 1.7% | 1.8% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Commercial Intl Bank(Egypt)S.A.E ($CBKD) | 21.7% | 26.9% | 30.1% | 30.3% | 28.5% |
| Guaranty Trust Bank ($GRTB) | 19.8% | 18.9% | 17.8% | 16.0% | |
| Mcb Bank Ltd ($MCBS) | 15.0% | 14.4% | 15.8% | 14.9% | 12.5% |
| United Bank Ltd ($UBLS) | 11.7% | 11.8% | 13.8% | 12.6% | 10.7% |
| Zenith Bank ($ZENB) | 19.0% | 17.6% | 15.0% | 11.2% | |
| |
|---|
| Median (43 companies) | 6.4% | 5.7% | 4.5% | 3.5% | 4.6% |
|---|
| HSBC Holdings ($HSBA) | 2.3% | 2.8% | 2.4% | 2.5% | 0.8% |
