China’s manufacturing activity contracted to a 11-month low in July, an HSBC survey showed Wednesday, the first evidence of the Asian economic giant losing further momentum in the third quarter. …read more
Source: FULL ARTICLE at Fox World News
By Russell Flannery, Forbes Staff Chinese manufacturing conditions in July deteriorated to their worst in 11 months, according to a survey by HSBC released today. …read more
Source: FULL ARTICLE at Forbes Latest
You’re online. You’ve setup a great e-commerce site. And you want to sell more of your products overseas. Maybe it’s to China where there could be “half a billion” opportunities. Or Europe. Or South America. Financing options, led by the Export-Import Bank and others like HSBC are plentiful. The U.S. Government and the Small Business administration have both developed comprehensive sites with tons of resources to help businesses, big and small, to export their products to overseas customers. In other words, there are plenty of resources available to help you. …read more
Source: FULL ARTICLE at Forbes Latest
We’re all used to being bombarded by advertising when we travel from airport to airport. Glowing ads speckle the terminal walls, HSBC has decorated the jetbridge gauntlet and some carriers have even taken to shilling their credit cards while in flight. It’s a lot to ask from a paid traveler, and it may be just the tip of the iceberg. …read more
Source: FULL ARTICLE at Forbes Latest
By Gordon G. Chang, Contributor HSBC Group is expected in the next few months to sell its 8.0% stake in the Bank of Shanghai. The financial services giant could receive as much as $800 million from its shares in the second-tier Chinese lender. Why do analysts think HSBC will unload its holding soon? It looks like the Bank of Shanghai is set to raise $2 billion by selling newly issued stock, on the Shanghai and Hong Kong exchanges, with a value of up to 30% of its existing shares. The listing could occur before June, so HSBC will have to act now if it does not want to be trapped by a lock-up period, typically imposed on existing shareholders for periods of up to a year. Two years ago, nobody thought HSBC would ever dispose of major Chinese assets. Now, there is talk it might get rid of all of them. Analysts sense a change in sentiment because HSBC is already dumping Chinese assets. This year it completed the sale of its 15.6% interest in Ping An to Thai conglomerate Charoen Pokphand Group for $9.4 billion. Previously, the shares in China’s second-largest life insurance company had been described as “strategic.” Then, there are rumors that the institution, once known as the Hongkong and Shanghai Bank, will also sell its half interest in HSBC Life Insurance, which laid off 130 sales staff recently. The investment community is even talking about a once-unthinkable event, the disposal of HSBC’s 18.7% holding in . John Bond, when he headed HSBC, wanted to increase the stake in Bocom, as China’s fifth-largest lender is known, and eventually control it. Today, however, HSBC looks like it will never achieve management control. The dominant view is that HSBC will be content to continue holding its Bocom stake because, as one unnamed Shanghai analyst told the South China Morning Post, a sale would mean “HSBC’s China story will be over.” That analyst may think it is inconceivable that any major bank would ever exit China, but the country is no longer that important to the world’s financial community. In fact, it looks as if HSBC will have to work hard to find another bank to take its Bank of Shanghai shares. The fact that it could not find a financial institution to buy its Ping An stake is a sign that, in general, foreign bankers are “divorcing” China, as South China Morning Post columnist Doug Young recently put it. The reason for the unhappiness is clear. HSBC, for instance, sold Ping An because it was unable to get “strategic returns” from the insurance company. HSBC is not the only institution to feel this way. Analysts think sold the bulk of its remaining holding in 2011 and Goldman Sachs unloaded another tranche of shares in the Industrial and Commercial Bank of China this January because, like HSBC, they were frustrated that their large stakes weren’t helping them further their China businesses. Chinese banks simply do not believe that they need enduring relations with foreign counterparts,
From: http://www.forbes.com/sites/gordonchang/2013/04/21/global-banks-are-divorcing-china/
A Spanish newspaper reports that a man wanted by Switzerland on suspicion of stealing confidential banking information is saying U.S. officials warned that he was in danger and advised him to go to Spain.
Herve Falciani, a former employee of global banking group HSBC, was arrested in July in Barcelona. He was freed with conditions, and is now fighting extradition to Switzerland.
In 2008, Falciani fled Switzerland to France. There, he said he collaborated with investigations into money laundering and tax evasion, handing over information linked to at least 24,000 HSBC customers.
In an interview published Sunday in El Pais newspaper, Falicani said he was cooperating with U.S. Justice Department officials when he was advised to head for Spain.
U.S. officials did not immediately offer comment on the claims.
From: http://feeds.foxnews.com/~r/foxnews/world/~3/pCxZbrj28iE/
By David O’Hara, The Motley Fool
Filed under: Investing
LONDON — Shares of pharmaceutical giant GlaxoSmithKline have performed well in the last month. While the FTSE 100 is down 1.5%, Glaxo is up 4.5%. Since the beginning of the year, Glaxo shares are up 16.3%. That’s a stonking performance for such a large company.
According to analyst forecasts, the shares are expected to pay 77.6 pence of dividends for the year. At today’s price, that equates to a yield of 5%.
The average FTSE 100 company trades on a price-to-earnings (P/E) ratio around 15.2 times forecast earnings. Sitting on a P/E today of 13.3, Glaxo is trading at a significant discount. That seems unfair for such a successful and reliable company.
HSBC
At current prices, HSBC makes up 7.8% of the FTSE 100. It shares have the most influence on the FTSE 100.
The banking giant currently trades on just 10.7 times consensus forecasts for 2013. Considering the resilience that HSBC has demonstrated during an industry crisis, that’s pretty mean.
There is no escaping the fact that bank shares remain very unpopular. However, I am beginning to see signs that politicians are tiring of banker bashing. The media is also starting to move on, as writers run out of new angles on old stories.
HSBC is forecast to grow earnings next year, putting the shares on a 2014 P/E of 9.4, with a prospective yield of 5.3%.
Vodafone
Recent speculation over the future of Vodafone‘s U.S. mobile investment in Verizon Wireless has pushed the shares to their highest level since 2007.
Making up almost 6% of the FTSE 100 by itself, the market‘s recent setback would have been more painful for index investors without the telecom giant’s recent rally.
While Vodafone is not likely to push the FTSE 100 to a 10-year high by itself, a new high for 2013 could be achieved. A sale of Vodafone’s stake in Verizon Wireless, or a takeover approach for Vodafone, could push the shares as high as 250 pence. A 25% rise in Vodafone’s share price would see the FTSE 100 rise beyond 6,500.
In the absence of a takeover, shareholders will be comforted by a reliable dividend stream. Vodafone is expected to pay 10.7 pence in the current calendar year, a 5.6% yield at today’s price.
These three big blue-chips may hold a dominant position in their markets today but are they safe to tuck away for the long term? Analysts here at The Motley Fool have prepared a new report “5 Shares to Retire On” with the lowdown on their five top income stocks to own for the years ahead. Just click here to get your free copy of this report today.
The article Will GlaxoSmithKline, HSBC Holdings, and Vodafone Group Push the FTSE 100 to Record Highs? originally appeared on Fool.com.
David owns shares in Vodafone but none of the other companies mentioned. The Motley Fool recommends GlaxoSmithKline and Vodafone Group.
From: http://www.dailyfinance.com/2013/04/12/will-glaxosmithkline-hsbc-holdings-and-vodafone-gr/
By Andrew Marder, The Motley Fool
Filed under: Investing
Ongoing litigation in the U.K. means that banks will likely be on the hook for mis-selling products to small business and individuals. According to the U.K.’s Financial Services Authority (FSA), the banks may have mis-sold up to 90% of the products under review. Claims have been coming in for over a year, and banks are just now undertaking a review of their sales, to determine which customers need to be compensated.
The banks facing the first wave of investigation are Barclays , Royal Bank of Scotland , HSBC , and Lloyds Banking Group . These companies are going to pay out something, as they’ve already admitted that rules were broken. The question remains — how much will it cost?
Swaps explained
The charges related to rate swaps that the banks tacked on to variable rate loans in the middle of the last decade. Customers who wanted — or were urged — to hedge against interest rates going up could agree to a “cap” and “floor” — together forming a “collar” — on the rates. If interest rates rose above a certain amount, the cap rate would come into effect, with a customer paying only that rate, not the higher, actual rate.
If rates fell below the floor, then customers would pay the floor rate plus the difference between the floor and the actual rate. Clearly, the banks were selling the collars under the pretense that rates would be rising, as they did until 2008 — when they suddenly fell.
Mis-selling to consumers
Once rates started to plummet, customers began to see their costs rise. Ironically, the very thing causing them to rise was a move designed to help borrowers. As the rates collapsed, customers approach their banks to cancel their coverage, only to discover that there was an often massive fee associated with cancellation.
The key to the litigation is not the product itself, which is relatively straightforward — it’s the selling of the product. Claimants believe that they were not given a choice when purchasing a collar, not fully made aware of the fees to cancel the product, or not given enough explanation to fully understand the risks involved.
Now the FSA believes that over 40,000 of these products were sold in the last decade. While many of these will have expired, or be of such low value that banks won’t be harmed, many are likely to result in repayments. As an example, Barclays announced that it has set aside $1.3 billion to repay harmed customers.
While the final tally won’t be known for some time, it’s a sure bet that this is one more hurdle for the banks to overcome before they can return to respectability — investors beware.
Many investors are scared about investing in big banking stocks after the crash, but the sector has one notable standout. In a sea of mismanaged and dangerous peers, it rises above as “The Only Big Bank Built to Last.” You can
From: http://www.dailyfinance.com/2013/04/11/banks-will-pay-for-misleading-customers/
Filed under: Housing Market, Foreclosure, Economy
The nation’s largest banks will begin sending payments this week to millions of Americans who may have been wrongfully foreclosed on during the housing crisis.
A total of $3.6 billion in cash will be distributed to 4.2 million borrowers who lost their homes or were at risk of foreclosure, the Federal Reserve and the U.S. Comptroller of the Currency said Tuesday. Payments will range from $300 to $125,000. About 90 percent of borrowers whose mortgages were serviced by 11 of the banks will receive payments by the end of April, the agencies said.
The last group of payments is expected in mid-July.
A large share of those receiving payments, about 3 million borrowers, will each get only $300 or $400, according to data issued by the two agencies. Around 80 percent of them will receive $1,000 or less.
At the other end of the scale, $125,000 payments will go to 1,082 military personnel, who were foreclosed upon in violation of a law prohibiting foreclosures on active-duty service members, and to 53 borrowers who weren’t in default on their mortgages but still lost their homes.
Generally homeowners who were wrongly denied a loan modification are entitled to relatively small payments. By contrast borrowers whose homes were deemed to be unfairly seized are eligible for the biggest payments.
The amounts apply to borrowers whose mortgages were serviced by the 11 banks. Details for the other two, Goldman Sachs and Morgan Stanley, will be announced in the near future, the agencies said.
The 13 banks, which include Bank of America, JPMorgan Chase, Wells Fargo and Citigroup, reached a settlement with the federal agencies in January. They agreed to pay a total $9.3 billion in cash and in reductions of mortgage balances.
The banks settled the regulators’ complaints that they wrongfully foreclosed on borrowers with abuses such as “robo-signing,” or automatically signing off on foreclosures without properly reviewing documents.
The settlement covers borrowers whose homes were in any stage of the foreclosure process in 2009 or 2010. It ended an independent review of loan files that the two agencies ordered in 2011.
Banks and consumer advocates had complained that the loan-by-loan reviews were time-consuming and costly and didn’t reach many affected borrowers. Some questioned the independence of the consultants who performed the reviews, who often ruled against borrowers.
Consumer advocates have criticized the deal, saying the regulators settled for too low a price by letting banks avoid full responsibility for wrongful foreclosures.
The other banks in the settlement are HSBC, MetLife Bank, PNC Financial Services, Sovereign, SunTrust, U.S. Bank, Aurora, Morgan Stanley and Goldman Sachs.
Permalink | Email this | Linking Blogs | <a target=_blank href="http://www.dailyfinance.com/2013/04/10/foreclosure-settlement-payments/#comments" title="View reader comments on this …read more
Source: FULL ARTICLE at DailyFinance
By David O’Hara, The Motley Fool
Filed under: Investing
BP
BP is striving to put the Gulf of Mexico disaster behind it. Yet as the company passes one milestone, another appears on the horizon. The current challenge for the company is in a Louisiana courtroom. BP and its partners in the ill-fated well are each seeking to demonstrate to a judge that they do not deserve to receive huge fines.
Provided that BP can afford to pay any resulting fine out of current budgets, then the shares should still pay a dividend of about $0.36 this year. At today’s share price, that equates to a yield of 5.3%. Though some investors may be worrying about the recent decline in the oil price, it’s worth remembering that there has historically been little correlation between the price of crude oil and BP shares.
Rio Tinto
Shares in mining companies have fallen recently on fears for the global economy. And Rio Tinto has suffered along with the rest, its shares losing 17% in the last three months. This fall means that the shares have moved into value territory. Rio shares now trade on 9.4 times 2012 profits. Two years of forecast earnings growth mean Rio is available on a 2014 price-to-earnings ratio of just 6.7. There is also a well-covered dividend that is expected to continue growing.
Like all resources companies, Rio Tinto has no control over the price of its products. Although the market is showing concerns over future profitability, the credible prospect of a 4% dividend this year should provide some comfort to buyers.
HSBC
HSBC is the U.K.’s biggest bank. The company’s size and diversity saw it weather the banking crisis much better than many of its peers.
In the last month, renewed fears over the health of the eurozone have knocked 8% off the HSBC share price. This pushes the shares toward bargain status. HSBC‘s shares today trade on 10.5 times consensus forecasts for 2013. The shareholder dividend is expected to be raised by about 12%, pushing the yield to 4.9%. Significant further growth is expected next year, meaning the 2014 P/E is just 9.3, with an anticipated yield of 5.4%.
HSBC will update the market with its Q1 trading statement on May 7.
Solid, dividend-paying blue chips like HSBC are the cornerstone of many value investors’ portfolios. If you want more income-producing investment ideas, then check out what the best income fund manager in the business has been buying. Neil Woodford is manager of top-performing fund Invesco Perpetual Income. To help you learn from this master, we have prepared a free report: “8 Shares Held By Britain’s Super Investor.” To get your totally free copy, click here.
The article 3 More Blue-Chip Bargains: BP, Rio Tinto, and HSBC originally appeared on Fool.com.
Source: FULL ARTICLE at DailyFinance
By Douglas Adams, The Motley Fool
Filed under: Investing
LONDON — HSBC has advanced 29% to 682 pence during the last 12 months, making the share one of the best performers in the FTSE 100.
The bank, which boasts 7,200 offices in more than 80 countries, seems to have impressed investors with a series of confident statements.
During July, HSBC announced half-year results for 2012 that showed core profits slip 3% to $10.6bn. The group added that its return on average shareholders’ equity during the six months was 10.5% and admitted it had earmarked $1.3bn to compensate U.K. customers that were mis-sold payment protection insurance.
During November, HSBC‘s third-quarter statement revealed adjusted profits had surged 125% to $5bn, and cost savings had reached $3.1bn to exceed the bank’s expectations. However, the results also showed an additional $800m provision relating to a money-laundering investigation in the States.
Then in March, HSBC disclosed full-year results that showed underlying profits up 18% to $18.4bn and an annual dividend up 10% to $0.45 per share. The bank also revealed its first three quarterly dividends of 2013 would be raised 11%.
Douglas Flint, HSBC‘s chairman, said at the time:
2012 was a year of considerable progress in delivering on the strategic priorities which the Board has tasked management to address. Our decision to focus on reshaping the Group through targeted disposals and closures and internal reorganisation is paying dividends.
Flint also referred to the bank’s position as one of the FTSE 100’s highest dividend payers.
HSBC‘s first-quarter update will be published on 7 May, which may reveal further positive news that can impress investors.
If you already own HSBC shares and are looking for additional blue-chip winners, this exclusive wealth report reviews five particularly attractive FTSE possibilities.
Indeed, all five suggestions offer a mix of robust prospects, illustrious histories and dependable dividends, and have just been declared by the Fool as “5 Shares You Can Retire On”!
Just click here for the report — it’s free.
The article Why HSBC Holdings Is Up 29% During the Last 12 Months originally appeared on Fool.com.
Douglas does not own any share mentioned in this article.
The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
(function(c,a){window.mixpanel=a;var b,d,h,e;b=c.createElement(“script”);
b.type=”text/javascript”;b.async=!0;b.src=(“https:”===c.location.protocol?”https:”:”http:”)+
‘//cdn.mxpnl.com/libs/mixpanel-2.2.min.js’;d=c.getElementsByTagName(“script”)[0];
d.parentNode.insertBefore(b,d);a._i=[];a.init=function(b,c,f){function d(a,b){
var c=b.split(“.”);2==c.length&&(a=a[c[0]],b=c[1]);a[b]=function(){a.push([b].concat(
Array.prototype.slice.call(arguments,0)))}}var g=a;”undefined”!==typeof f?g=a[f]=[]:
f=”mixpanel”;g.people=g.people||[];h=[‘disable’,’track’,’track_pageview’,’track_links’,
‘track_forms’,’register’,’register_once’,’unregister’,’identify’,’alias’,’name_tag’,
‘set_config’,’people.set’,’people.increment’];for(e=0;e<h.length;e++)d(g,h[e]);
a._i.push([b,c,f])};a.__SV=1.2;})(document,window.mixpanel||[]);
mixpanel.init("9659875b92ba8fa639ba476aedbb73b9");
function addEvent(obj, evType, fn, useCapture){
if (obj.addEventListener){
…read more
Source: FULL ARTICLE at DailyFinance
By John Maxfield, The Motley Fool
Filed under: Investing
Given that you clicked on this article, it seems safe to assume you either own stock in M&T Bank or are considering buying shares in the near future. If so, then you’ve come to the right place. The table below reveals the nine most critical numbers that investors need to know about M&T Bank stock before deciding whether to buy, sell, or hold it.
But before getting to that, a brief introduction is in order. Established in 1856 as Manufacturers and Traders Bank, M&T Bank is today one of the 20 largest commercial banks in the United States. Headquartered in Buffalo, New York, it operates more than 700 branches and over 2,000 ATMs across eight states, the District of Columbia, and in Toronto, Canada. As of the end of 2012, it had $83 billion of assets on its balance sheet, ranking it in size between Alabama’s Regions Financial and Texas’ Comerica.
As you can see in the table above, from a shareholder’s perspective, M&T Bank exhibits a number of attractive characteristics. Its net interest margin is above average, as are its return on equity and payout ratio. In addition, both of its non-performing loans ratio and its efficiency ratio are lower than average, evidencing a well-run bank that manages credit risk more effectively than its peers. It accordingly follows that the biggest downside is its valuation. Trading at 2.33 times tangible book value, M&T Bank stock is one of the most dearly priced regional lenders in the market today.
The one thing M&T Bank stock investors should be wary about is its recent acquisition of Hudson City Bancorp . To say that this is a transformative deal for M&T Bank is an understatement. With $40 billion in assets, Hudson City will increase M&T’s size by 50% in one fell swoop. But while this sounds good in theory, acquisitions like this rarely work out for shareholders. A perfect example of this is First Niagara Financial‘s recent transformative acquisition of HSBC‘s branch network in the Northeastern United States, which led the CEO of First Niagara to relinquish his post last month.
Discover the “only big bank built to last”
Many investors are scared about investing in big banking stocks after the crash, but the sector has one notable standout. In a sea of mismanaged and dangerous peers, it rises above as “The Only Big Bank Built to Last.” You can uncover the top pick that Warren Buffett loves in The Motley Fool’s new report. It’s free, so click here to access it now.
The article M&T Bank Stock: 9 Critical Numbers originally appeared on Fool.com.
John Maxfield has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. …read more
Source: FULL ARTICLE at DailyFinance
By Andrew Marder, The Motley Fool
Filed under: Investing
After Barclays received a $430 million fine last year for rigging the LIBOR, the bank decided to do some introspection. Management commissioned an internal investigation in to what went wrong, and what the bank could look out for in the future to avoid a relapse. In summary, “The culture that emerged tended to favor transactions over relationships, the short term over sustainability and financial over other business purposes.”
Making bank
The report concluded that pay was one of the main drivers of the risk-taking attitude that pervaded Barclays throughout the 2000s. During that period, Bob Diamond — who would go on to become CEO — was running the investment arm of the bank with a calculating genius that helped Barclays generate 23 billion pounds in revenue during 2007. At that time, the bank employed 140,000 people across the world. It shouldn’t come as a surprise that the report faulted the bank for becoming “complex to manage.”
To sustain that size, traders in the investment bank had to make a lot of money. As a result, they expected to be paid large sums. So far, so good. The problem came when the equation reversed itself. Bankers were no longer being paid big bonuses to accomplish the goal of making the bank money, they were making the bank money to accomplish the goal of being paid big bonuses.
The solution
The report is being heralded as a meaningful step in the right direction. From all accounts, the more than 200-page tome doesn’t pull any punches, and Barclays has made the whole thing available for the general public. CEO Antony Jenkins has already made big steps toward repairing the bank’s reputation. In addition to the report, he has closed the bank’s tax avoidance division and trimmed down some of the company’s fat.
The same sorts of moves need to be made across the sector. Recently, companies like HSBC and Lloyds have been fined for money laundering and insurance mis-selling, respectively. Those banks have yet to win back the public’s trust and seem to have done little to address their underlying faults. To Lloyds’ credit, it quickly capitulated after it came under scrutiny for mis-selling. HSBC, meanwhile, has admitted to its past failures while insisting that it’s now in a very different place.
The bottom line
There’s still more talk than action in the sector, and it will be interesting to see if other banks follow in Barclay’s footsteps. The road to winning back the public is a long and arduous one, and ignoring the past isn’t going to fix what’s wrong. As banks start to bounce back, they need to keep the bad years in mind so they don’t come back to haunt investors, or the general public. One step at a time, I suppose.
Bank of America’s stock doubled in 2012. Is there more yet to come? With significant challenges still ahead, it’s critical to have a solid understanding …read more
Source: FULL ARTICLE at DailyFinance
By Roland Head, The Motley Fool
Filed under: Investing
LONDON — If you’re interested in building a profitable, diversified portfolio, then you will often need to compare similar companies when choosing which share to buy next. These comparisons aren’t always as easy as they sound, so in this series, I’m going to compare some of the best-known names from the FTSE 100, FTSE 250 and the U.S. stock market.
I’m going to use three key criteria — value, income, and growth — to compare companies to their sector peers. I’ve included some U.S. shares, as these provide U.K. investors with access to some of the world’s largest and most successful companies. Although there are some tax implications to holding U.S. shares in a U.K. dealing account, they are pretty straightforward and — I feel — are outweighed by the investing potential of the American market.
Today, I’m going to take a look at British-Asian banking giant HSBC Holdings and America’s largest bank, JPMorgan Chase .
1. Value
The easiest way to lose money on shares is to pay too much for them — so, which share looks like a better value, HSBC, or JPMorgan?
| Value | HSBC | JPMorgan |
|---|---|---|
| Current price-to-earnings ratio (P/E) | 14.5 | 9.2 |
| Forecast P/E | 10.9 | 8.8 |
| Price-to-book ratio (P/B) | 1.1 | 0.9 |
| Price-to-sales ratio (P/S) | 2.8 | 1.9 |
On the face of it, JPMorgan looks better value than HSBC, with a below-average P/E ratio and a price to book (P/B) ratio below one, indicating that the company’s theoretical breakup value may be greater than its market capitalization. In contrast, HSBC‘s current P/E and P/B ratios suggest it is fully valued at present.
2. Income
With low interest rates set to continue for the foreseeable future, dividends have become one of the most popular ways of generating an investment income. How do HSBC and JPMorgan compare in terms of income?
| Value | HSBC | JPMorgan |
|---|---|---|
| Current dividend yield | 4.3% | 2.5% |
| 5-year average historical yield | 4.5% | 2.1% |
| 5-year dividend average growth rate | -11% | -4.1% |
| 2013 forecast yield | 4.7% | 2.9% |
Most U.K. stocks offer a higher yield than their American counterparts, and HSBC is no exception, with a five-year average yield that is more than twice that of JPMorgan. Although that gap is closing as the American banking sector recovers from the financial crisis, HSBC‘s 4.7% forecast yield is more than 50% higher than JPMorgan’s forecast yield of 2.9%.
3. Growth
Even if your main interest is value or income investing, you do need to consider growth. At the very least, a company needs to deliver growth in line with inflation — and realistically, most successful companies need to grow ahead of inflation if they are to protect their market share and profit margins.
How do HSBC and JPMorgan shape up in terms of growth?
| Value | HSBC | JPMorgan |
|---|---|---|
| 5-year earnings-per-share growth rate | -12.9% | -4.7% |
| 5-year revenue growth rate | -9.3% | 3.7% |
| 5-year share price return | -17.8% | 11.1% |
JPMorgan looks the stronger of the two banks in terms of recent growth, but last year saw both banks take knocks to their previously untarnished reputations. In JPMorgan’s case, London-based rogue trader Bruno Iksil — who became known as the London …read more
Source: FULL ARTICLE at DailyFinance
By David O’Hara, The Motley Fool
Filed under: Investing
LONDON — Shares in Lloyds are 10% off their high for the year. They are now just 2% more expensive than they were back at the beginning of 2013. By comparison, the FTSE 100 index is up 10%.
Like the rest of the banks, Lloyds fell recently following the Cyprus scare. Bank share prices then suffered again when their new regulator announced that it wants the sector to raise more capital.
Why I expect a big rise
The market could dramatically reappraise Lloyds shares when the company reports its first-quarter results at the end of the month. If investors come around to my analysis, the result could be a 20% share price rise.
Lloyds’ forthcoming Q1 results could be the first announcement in a long time that does not contain huge provisions for Payment Protection Insurance (PPI) compensation payouts. So far, Lloyds has set aside 6.5 billion pounds to pay customers for PPI misselling. At the end of 2012, 2 billion pounds of this provision remained unutilized.
I also expect that impairments at Lloyds in 2013 will be considerably lower than they were one year ago. In 2012, writedowns on assets and loans totalled 5.7 billion pounds — 40% less than the previous year.
Lloyds’ first-quarter results, scheduled for 30 April, are a fantastic opportunity for the bank to demonstrate just how profitable it could be going forward. If the bank can show further provisions for PPI are unlikely and that impairments are still falling fast, 5.6 billion pounds could be added to group profit before tax for the full year.
Even better, recent comments from Business Secretary Vince Cable show that even he has been sticking up for the banks. We may have passed the peak of political pressure to punish the sector.
How high could Lloyds’ shares go?
Six weeks ago, shares in Lloyds traded around 55 pence. Analysts expect that the company will make 5.6 pence in earnings per share for 2014. Rival banks Standard Chartered and HSBC today trade close ten times 2014 forecasts. I think that the banks will spend the next month demonstrating their value to investors. If Q1 results can inspire earnings upgrades, I would expect Lloyds’ shares to end May trading around 60 pence.
Making quick gains on blue-chip shares like Lloyds can help you to build your portfolio fast. If you would like to learn more investment techniques that could yield big profits, get the free Motley Fool report “10 Steps to Making a Million in the Market.” This special report could change the way that you invest forever. Just click here to get this totally free report today.
The article Is This Your Last Chance to Buy Lloyds? originally appeared on Fool.com.
David owns shares in Lloyds Banking Group. The Motley Fool owns shares in Standard Chartered. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a …read more
Source: FULL ARTICLE at DailyFinance
By G. A. Chester, The Motley Fool
Filed under: Investing
LONDON — Every quarter, I take a look at the largest FTSE 100 companies in each of the index’s 10 industries to see how they shape up as a potential “starter” portfolio.
The table below shows the 10 industry heavyweights and their current valuations based on forecast 12-month price-to-earnings (P/E) ratios and dividend yields.
|
Company |
Industry |
Recent Share Price (pence) |
P/E |
Yield (%) |
|---|---|---|---|---|
|
ARM Holdings |
Technology |
921 |
44.9 |
0.6 |
|
BHP Billiton |
Basic materials |
1,915 |
10.1 |
4.1 |
|
British American Tobacco |
Consumer goods |
3,527 |
15.0 |
4.3 |
|
GlaxoSmithKline |
Health care |
1,539 |
13.0 |
5.1 |
|
HSBC Holdings |
Financials |
703 |
10.7 |
4.8 |
|
National Grid |
Utilities |
765 |
14.0 |
5.5 |
|
Rolls-Royce |
Industrials |
1,130 |
16.9 |
2.0 |
|
Royal Dutch Shell |
Oil and gas |
2,185 |
8.0 |
5.4 |
|
Tesco |
Consumer services |
382 |
11.6 |
4.1 |
|
Vodafone |
Telecommunications |
187 |
11.4 |
5.9 |
Excluding tech share ARM Holdings, the companies have an average P/E ratio of 12.3 and an average dividend yield of 4.6%. The table below shows how the current ratings compare with those of the past.
|
Month |
P/E |
Yield (%) |
|---|---|---|
|
April 2013 |
12.3 |
4.6 |
|
January 2013 |
11.4 |
4.9 |
|
October 2012 |
11.1 |
5.0 |
|
July 2012 |
10.7 |
5.0 |
|
October 2011 |
9.8 |
5.2 |
As you can see, the group of nine industry heavyweights is rated more highly today than at any time in the past couple of years.
My rule of thumb for this group is that an average P/E below 10 is firmly in “good value” territory, while a P/E above 14 starts to move toward expensive. On this spectrum, the group as a whole is neither cheap nor expensive. As such, I think the market currently offers a fair opportunity for long-term investors to buy a blue-chip bedrock of industry heavyweights for a U.K. equity portfolio.
At the individual company level, there are three stocks whose ratings compare favorably with their level three months ago. So, let’s have a look at them.
BHP Billiton
After strong rises in equity markets since the start of the year, the share prices of eight of the U.K.’s 10 industry giants are higher today than when I last looked at them in January. Global mining titan BHP Billiton is the bigger underperformer of the two exceptions: The company’s shares are trading at 1,915 pence compared with 2,145 pence last time.
BHP Billiton’s drop in share price and some upgrades to forecast earnings and dividends bring the P/E down to an attractive-looking 10.1 from 12.8, while the yield rises to an industry-leading 4.1% from 3.6%.
Royal Dutch Shell
Oil supermajor Royal Dutch Shell is the other company whose shares are lower today than three months ago — but by very little: 2,185 pence compared with 2,197 pence.
Shell’s P/E remains firmly in “value” territory at a mere eight (the same as last time), making the company the only one of our industry giants with an earnings multiple in single digits at the present time. Meanwhile, the dividend yield has edged up from 5.1% to an even-juicier 5.4%.
HSBC
Banking behemoth HSBC, in contrast to BHP Billiton and Shell, has seen its shares rise since January: by 8% to 703 pence from 651 pence.
Nevertheless, as a result of the City’s more optimistic earnings and dividend outlook, HSBC‘s P/E today is only fractionally higher than last time: 10.7 compared with 10.6. The company’s sector-leading dividend yield has nudged up to 4.8% from 4.6%.
Finally, if you already have BHP Billiton, Shell, and HSBC tucked away in your …read more
Source: FULL ARTICLE at DailyFinance
By Eric Volkman, The Motley Fool
Filed under: Investing
Newcastle Investment is delving into the consumer loan business, with a bit of real estate financing on the side. The mortgage REIT has bought a 30% equity interest in a consumer-loan portfolio from HSBC unit HSBC Finance. The price for the stake is roughly $3 billion, which includes closing costs, fees, and other outlays.
The loan portfolio consists of more than 400,000 loans. Around 70% are personal unsecured loans, while 30% fall into the personal-homeowner category. On average, the balance of these debts is $9,500 and their expected average life is three years.
Newcastle is funding the purchase by using $2.2 billion in asset-backed notes and $800 million in equity.
The article Newcastle Investment Buys Stake in HSBC Loan Portfolio originally appeared on Fool.com.
Fool contributor Eric Volkman and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
(function(c,a){window.mixpanel=a;var b,d,h,e;b=c.createElement(“script”);
b.type=”text/javascript”;b.async=!0;b.src=(“https:”===c.location.protocol?”https:”:”http:”)+
‘//cdn.mxpnl.com/libs/mixpanel-2.2.min.js’;d=c.getElementsByTagName(“script”)[0];
d.parentNode.insertBefore(b,d);a._i=[];a.init=function(b,c,f){function d(a,b){
var c=b.split(“.”);2==c.length&&(a=a[c[0]],b=c[1]);a[b]=function(){a.push([b].concat(
Array.prototype.slice.call(arguments,0)))}}var g=a;”undefined”!==typeof f?g=a[f]=[]:
f=”mixpanel”;g.people=g.people||[];h=[‘disable’,’track’,’track_pageview’,’track_links’,
‘track_forms’,’register’,’register_once’,’unregister’,’identify’,’alias’,’name_tag’,
‘set_config’,’people.set’,’people.increment’];for(e=0;e<h.length;e++)d(g,h[e]);
a._i.push([b,c,f])};a.__SV=1.2;})(document,window.mixpanel||[]);
mixpanel.init("9659875b92ba8fa639ba476aedbb73b9");
function addEvent(obj, evType, fn, useCapture){
if (obj.addEventListener){
obj.addEventListener(evType, fn, useCapture);
return true;
} else if (obj.attachEvent){
var r = obj.attachEvent("on"+evType, fn);
return r;
}
}
addEvent(window, "load", function(){new FoolVisualSciences();})
addEvent(window, "load", function(){new PickAd();})
var themeName = 'dailyfinance.com';
var _gaq = _gaq || [];
_gaq.push(['_setAccount', 'UA-24928199-1']);
_gaq.push(['_trackPageview']);
(function () {
var ga = document.createElement('script');
ga.type = 'text/javascript';
ga.async = true;
ga.src = ('https:' == document.location.protocol ? 'https://ssl' : 'http://www') + '.google-analytics.com/ga.js';
var s = document.getElementsByTagName('script')[0];
s.parentNode.insertBefore(ga, s);
})();
Read | Permalink | Email this | Linking Blogs | Comments
By John Maxfield, The Motley Fool
Filed under: Investing
Shares of the nation’s second largest bank by assets, Bank of America , are trading higher today after the lending giant came to an agreement with the federal regulator of credit unions. Under the terms of the deal, Bank of America will pay $165 million to settle allegations that it “downplayed risks of poor-quality mortgages packaged into securities” that were then sold to credit unions around the country.
According to prepared remarks issued this morning by the National Credit Union Administration, “As a result of the Bank of America settlement, NCUA has now successfully recovered more than a third of a billion dollars on behalf of credit unions. These settlements and our ongoing lawsuits further NCUA‘s goal of minimizing the losses of the corporate crisis and cutting future costs to credit unions.”
As the remarks intimate, Bank of America joins a growing list of institutions that have come to terms with the NCUA. In November of 2011, Deutsche Bank and Citigroup agreed to pay a combined and eerily similar $165.5 million to settle analogous claims — for the NCUA press releases see here and here, respectively (links may open PDFs). And in March of last year, London-based HSBC did the same. In addition, as The Wall Street Journal noted, the NCUA still has outstanding suits against JPMorgan Chase and Goldman Sachs , among others.
For Bank of America specifically, this marks a small but important victory on its journey to put past transgressions behind it — primarily those of Countrywide Financial, which the bank acquired at the beginning of 2008. As I discussed at length in this series on Bank of America’s legal liabilities, while it’s already paid out tens of billions of dollars to atone for Countrywide’s sins, considerable obstacles remain ahead.
That aside, this agreement helps to clear up yet another unknown liability that’s been holding down shares of the bank. At the beginning of this year, Bank of America acknowledged that it had come to a preliminarily agreement on the settlement amount with the NCUA. But beyond the fact that the amount wasn’t disclosed at the time, it was also “subject to the negotiation and execution of mutually agreeable settlement documentation and approval by the NCUA board.” Suffice it to say, the news today puts any questions to rest.
Expert advice on whether to buy or sell Bank of America’s stock
Bank of America’s stock doubled in 2012. Is there more yet to come? With significant challenges still ahead, it’s critical to have a solid understanding of this megabank before adding it to your portfolio. In The Motley Fool’s premium research report on B of A, analysts Anand Chokkavelu, CFA, and Matt Koppenheffer, Financials bureau chief, lift the veil on the bank’s operations, including detailing three reasons to buy and three reasons to sell. Click here now to claim your copy.
By G. A. Chester, The Motley Fool
Filed under: Investing
LONDON — Every quarter, I take a look at the largest FTSE 100 companies in each of the index’s 10 industries to see how they shape up as a potential “starter” portfolio.
The table below shows the 10 industry heavyweights and their current valuations based on forecast 12-month price-to-earnings (P/E) ratios and dividend yields.
| Company | Industry | Recent Share Price (in pence) | P/E | Yield (%) |
|---|---|---|---|---|
| ARM Holdings | Technology | 921 | 44.9 | 0.6 |
| BHP Billiton | Basic Materials | 1,915 | 10.1 | 4.1 |
| British American Tobacco | Consumer Goods | 3,527 | 15.0 | 4.3 |
| GlaxoSmithKline | Health Care | 1,539 | 13.0 | 5.1 |
| HSBC Holdings | Financials | 703 | 10.7 | 4.8 |
| National Grid | Utilities | 765 | 14.0 | 5.5 |
| Rolls-Royce | Industrials | 1,130 | 16.9 | 2.0 |
| Royal Dutch Shell | Oil & Gas | 2,185 | 8.0 | 5.4 |
| Tesco | Consumer Services | 382 | 11.6 | 4.1 |
| Vodafone | Telecommunications | 187 | 11.4 | 5.9 |
Excluding tech share ARM Holdings, the companies have an average price-to-earnings (P/E) ratio of 12.3 and an average dividend yield of 4.6%. The table below shows how the current ratings compare with those of the past.
| P/E | Yield (%) | |
|---|---|---|
| April 2013 | 12.3 | 4.6 |
| January 2013 | 11.4 | 4.9 |
| October 2012 | 11.1 | 5.0 |
| July 2012 | 10.7 | 5.0 |
| October 2011 | 9.8 | 5.2 |
As you can see, the group of nine industry heavyweights is rated more highly today than at any time in the past couple of years.
My rule of thumb for this group is that an average P/E below 10 is firmly in “good value” territory, while a P/E above 14 starts to move toward expensive. On this spectrum the group as a whole is neither cheap nor expensive. As such, I think the market currently offers a fair opportunity for long-term investors to buy a blue-chip bedrock of industry heavyweights for a U.K. equity portfolio.
At the individual company level, there are three stocks whose ratings compare favorably with their level three months ago. So, let’s have a look at them.
BHP Billiton
After strong rises in equity markets since the start of the year, the share prices of eight of the U.K.’s 10 industry giants are higher today than when I last looked at them in January. Global mining titan BHP Billiton is the bigger underperformer of the two exceptions: The company’s shares are trading at 1,915 pence compared with 2,145 pence last time.
BHP Billiton’s drop in share price, and some upgrades to forecast earnings and dividends, bring the P/E down to an attractive-looking 10.1 from 12.8, while the yield rises to an industry-leading 4.1% from 3.6%.
Royal Dutch Shell
Oil super-major Royal Dutch Shell is the other company whose shares are lower today than three months ago — but by very little: 2,185 pence compared with 2,197 pence.
Shell’s P/E remains firmly in “value” territory at a mere eight (the same as last time), making the company the only one of our industry giants with an earnings multiple in the single digits at the present time. Meanwhile, the dividend yield has edged up from 5.1% to an even-juicier 5.4%.
HSBC
Banking behemoth HSBC, in contrast to BHP Billiton and Shell, has seen its shares rise since January: by 8% to 703 pence from 651 pence.
Nevertheless, as a result of the City’s more optimistic earnings and dividend outlook, HSBC‘s P/E today is only fractionally higher than last time: 10.7 compared with 10.6. The company’s sector-leading dividend yield has nudged up to 4.8% from 4.6%.
Finally, if you already have BHP Billiton, Shell, and HSBC tucked away in your portfolio and are …read more
Source: FULL ARTICLE at DailyFinance
By Roland Head, The Motley Fool
Filed under: Investing
LONDON — Stock index futures at 7 a.m. EDT indicate that the Dow Jones Industrial Average may open up by a nominal eight points this morning, while the S&P 500 is expected to open flat after closing at a new record high of 1,569 points on Thursday for the first time since October 2007.
According to Bloomberg, recent gains in the S&P 500 mean that companies’ share prices are now just 5% below analysts’ average price estimates. That’s closer than they have been for the last seven years and substantially below the historic average of 14%. At the same time, data published by BEA/Haver Analytics shows that corporate profits have reached their highest levels relative to GDP since 1943, prompting some analysts to suggest that the current stock market bull run has some distance to go.
However, trading may be light today, as most European markets, including the FTSE 100, remain closed for a public holiday today. In Asia, Japan’s Nikkei index fell 2.1% to hit a three-week low in Monday trading after investors took profits following recent gains. The Nikkei is now 4.1% below its March 21 high of 12,650, which marked a 4.5-year peak for the index. In China, the HSBC manufacturing index rose to 51.6 in February, up from 50.4 in January. Although this is slightly below the preliminary “flash” reading of 51.7, it suggests that China‘s manufacturing sector is continuing to recover, a conclusion supported by China‘s official PMI, which rose from 50.1 to 50.9 in February.
U.S. economic reports due today include the Markit Purchasing Managers’ Index for March at 9 a.m. EDT, followed at 10 a.m. EDT by the ISM manufacturing index for March, which is expected to remain unchanged from February at 54.2%. Also due at 10 a.m. EDT, construction-spending figures for February are expected to show that spending rose by 1% in February after falling 2.1% in January.
Stocks that may attract investors’ attention today include Cal-Maine Foods, which reported third-quarter earnings of $1.27 per share on revenue of $360.4 million before the bell this morning, beating consensus forecasts for earnings of $1.26 per share on revenue of $356.94 million. Other companies due to report before the opening bell include MFC Industrial. Facebook stock may be actively traded this week ahead of a major announcement by the company on April 4, which is rumored to be a Facebook phone that will use a customised version of the Google Android operating system.
Let’s not forget that the Dow’s daily movements can add up to some serious long-term gains. Indeed, Warren Buffett recently wrote, “The Dow advanced from 66 to 11,497 in the 20th Century, a staggering 17,320% increase that materialized despite four costly wars, a Great Depression and many recessions.” If you, like Buffett, are convinced of the long-term power of the Dow, you should read “5 Stocks To Retire On.” Your long-term wealth could be transformed, even in this uncertain economy. Simply click …read more
Source: FULL ARTICLE at DailyFinance
