HSBC (HSBC Stock): Full year results and transition plan outlook

HSBC Group is considered the largest European bank by assets; however, in recent months it has been affected and under pressure from the tensions it maintains with China and the United States, after apparently declaring itself to be in favor of the Hong Kong security law that seeks to contribute to a stable environment for businesses and strengthen the confidence of investors.

Given the statements of the president of HSBC where he assured the bank would resume the payment of dividends as soon as possible, the bank’s shares rose 4%. He also said the yield could help to obtain positive returns with a meager dividend of $0.22, offering yields of around 4% at current prices. This positive outlook for the bank could be linked to the increase in the participation of its main shareholders Ping An Asset Management, which has been active since September last year.

For its part, and due to the transition that many banks have decided to initiate towards online banking due to the Covid-19 pandemic, the bank has mentioned that it plans to gradually reduce its investment banking operations and significantly revise its operations in the United States and Europe which would see the headcount reduced by 35,000 with further focus on its main Asia businesses. Tomorrow, (February 23) the bank posts its annual results and an update on the transformation plan is also expected. Earlier today the shift and pivot to Asia was once again emphasized as the bank announced senior management changes as three top London based executives are moved to the region.

The numbers are expected to show a fall in pre-tax profit of over 38% to $8.3 billion for the full-year. Reuters today is focusing on the five key elements investors will be looking for in tomorrow’s numbers and transition plan.

1. Plans to boost fee income?

2. More details on the “Pivot to Asia” plans.

3. Will there be a dividend payment? If not when?

4. How will the contraction in the US and Europe continue?

5. Anymore job cuts on top of the 35,000 by 2023 already announced?

HSBC’s share price continues its bullish rally since October 2020, still oscillating around 4.0000 with a range that goes from 3.7507 to 4.2736, with the current price at 4.1835 after forming a double bottom after breaking the current support of the 38.2 Fibonacci. If it manages to maintain the price of 4.0 we could continue looking for targets at the next resistance at 38.2 and 61.8 at 4.5350 and 4.5829 respectively or even continue to the 5.0000 or 78.6 level at 5.1754.

In the case of breaking the 4.0 down again, we have supports in the bullish guideline, the 38.2 at 3.7507, the 38.2 of the last range at 3.5579, the 61.8 at 3.1157 and the psychological level of 3.0000.