Five years ago, I hesitated to invest in HSBC shares. Despite recognizing their potential, I was concerned about the intense geopolitical tensions between the U.S. and China. Yet, HSBC has navigated these challenges effectively, leading to a significant increase in its stock value.
HSBC Shares: £10,000 Investment in 2025 Sees Significant Growth
Over the last five years, HSBC’s share price surged by 178%. Investors who committed £10,000 would have seen their investment grow to £27,800, plus dividends. Recently, the share price rose by 47% in just one year, turning an initial investment of £10,000 into approximately £14,700. With a trailing yield of 4.5%, this would add an extra £450 in income, bringing the total to £15,150.
Current Market Performance
HSBC continues to exhibit strong performance despite a volatile market. The bank is currently valued with a price-to-earnings ratio of 11.9 and a price-to-book ratio of around 1.3. These metrics indicate that while shares are not extremely cheap, they remain relatively reasonable.
Financial Highlights
- 2023 Profits: Increased by 78%, reaching $30.3 billion.
- Dividends: Raised alongside $7 billion in announced share buybacks.
- 2024 Profits: Continued growth with profits before tax reaching $32.3 billion.
- Q3 2023 Results: Pre-tax profits dropped 14% to $7.3 billion, primarily due to a legal charge.
Potential Risks
Investors should be aware of several risks facing HSBC. The ongoing U.S.-China tensions persist, and the Chinese economy struggles to regain momentum. Additionally, rising commercial loan defaults in the U.S. and a potential downturn in the UK market pose challenges. The Bank of England may implement interest rate cuts in 2026, which could affect net interest margins.
While uncertainties exist, many view current circumstances as a potential buying opportunity. HSBC’s strong profit generation and positive market momentum could benefit long-term investors.
