- The bank is well capitalised and this has enabled it to perform relatively well against other banks in recent economic events.
- The level of capitalisation means that, going forward, the bank is unlikely to need to borrow from the UK government: this will enable it to retain more autonomy.
- The bank has a strong presence in emerging markets, putting it in a good position to take advantage of future growth in those economies.
- The bank’s global presence in Europe, Asia and South America helps to spread risk and offers significant economies of scale.
- Despite rebranding relatively recently (1999), the HSBC brand has become well-established and is considered particularly valuable within the industry.
- HSBC associates itself strongly with investment in the small business sector, but the current economic situation has led to increased risks, potentially compromising the activity levels in this area of the operation.
- The bank was involved with sub-prime markets in the US and has had to write off large figures lent to high-risk borrowers.
- Despite falls in the UK interest rate, HSBC has increased its mortgage rates. This may be perceived negatively by borrowers and potential borrowers, adds pressure to an already depressed housing market and could ultimately lead to more defaulting as borrowers struggle with higher repayments.
- A redundancy programme announced recently may affect morale among staff, leading to decreased production and loyalty.
- HSBC’s branding emphasises its global presence, and this may be seen negatively by some customers in its implication of homogenisation and lack of personalisation.
- HSBC’s high level of capitalisation places it in a strong position to acquire assets
- Banks finding trading conditions particularly difficult at present may be available at low cost
- HSBC also has adequate capital to purchase stronger banks such as Bank Ekonomi in Indonesia, in which it has purchased a stake to continue its Asian expansion despite challenging economic times.
- HSBC’s generally strong position presents the opportunity to outperform competitors during the economic downturn and to build a reputation for being one of the safer banks for depositors, helping to increase resources for lending.
- Negative press coverage of competitors such as HBOS may encourage customers to choose HSBC instead.
- Trust in banks has decreased due to financial losses suffered by investors, who may be more inclined to invest elsewhere.
- Financial losses affecting banks and investors on a global scale have resulted in less credit being available to customers. In the UK this is coupled with increases in living costs resulting in less money being saved.
- The falling property market has created a rise in numbers of homeowners with negative equity. If a property is worth less than was borrowed to finance its purchase, there is little likelihood that the bank will recoup all its losses if owners default.
- Claims have been made that HSBC has understated losses resulting from US sub-prime markets, and this could undermine confidence in the bank.
Source: ChinaStones - http://china-stones.info/guides/swot-analyses/hsbc-swot-analysis.php