SWOT analysis of HSBC (2024)

SWOT analysis of HSBC

This is a detailed SWOT analysis of HSBC. It aims to analyse the strengths and the weaknesses of HSBC. It also aims to explore the opportunities and the threats facing the bank. HSBC is one of the largest banking and financial services organisations in the world.

Strengths of HSBC

It goes without saying that the HSBC brand is recognised worldwide. It operates in 64 countries and territories. The four global businesses that the bank has are Retail Banking and Wealth Management, Commercial Banking, Global Banking and Markets, and Global Private Banking. HSBC has more than 40 million customers worldwide (HSBC Group, 2022).

HSBC is one of the leading banks in the world by market capitalisation. Market capitalisation (stock market value) refers to the total value of issued shares of a publicly traded company. It is also one of the largest banks in the world by total assets. Its total asset is around $2.98 trillion (Norrestad, 2021).

HSBC is a diversified financial institution. More than 50 per cent of its client revenue comes from businesses and individuals with an international presence. It is listed on the London, Hong Kong, New York, Paris and Bermuda stock exchanges. Its shares are held by around 194,000 shareholders in 130 countries and territories. It is also one of the largest mortgage lenders in the UK (HSBC Group, 2022).

HSBC’s initiatives with regards to corporate social responsibility are very good as well. It recognises its responsibility to contribute to the economic development and sustainable growth in the communities it serves around the world. For example, it announced the launch of a £500m Green SME Fund to help businesses of all sizes to transition and thrive in a low carbon economy (HSBC Group, 2022). Likewise, giving customers a ‘digital first’ option and sending their statements by email instead of postal delivery are two examples of helping customers function more sustainably.

Weaknesses of HSBC

Discussion on weaknesses is a key part in the SWOT analysis of HSBC. Fall in share prices and fluctuations in profits have been a problem for HSBC in the last several years. For instance, its share price dropped significantly in 2018. Share price also fell in 2020 and 2021. Fall in share prices impacts on the confidence of long-term investors.

HSBC has not had much success with social media advertising. It has not been able to promote its products successfully because it was not much successful to create an online presence that attracts customers with engaging contents.

HSBC customer satisfaction rate is not that great either. In fact, many customers are unhappy with its customer service. Similarly, many employees are unhappy as well who may not recommend friends or family members to work with it.

A computer glitch delayed 275,000 HSBC payments in August 2015 (BBC, 2015). HSBC also found itself mired in controversy in a number of times in the past years. For instance, it was one of the banks fined in the UK and the USA in 2014 in the Forex Scandal. Likewise, a US Senate committee issued a report stating that the bank was found in breach of money-laundering rules.

Opportunities for HSBC

HSBC can grow further in many of its existing markets. Countries such as China, India, the UK, the United States and some others offer the bank opportunities for further growth. With a total of population of 1.40 billion, India is a fantastic market for personal banking. HSBC has potential to expand further in the British mortgage market as well.

Going into other untouched markets through acquisitions is worth exploring. In recent years, HSBC has been increasing its investments in emerging markets. This has helped it profit from new opportunities and expand its customer base.

Threats to HSBC

Threat is the last element to address in the SWOT analysis of HSBC. The bank faces threats from a number of competitors because of its operations in many countries and territories. The main competitors of HSBC in the Unites States are JPMorgan Chase, Bank of America, Citigroup, Morgan Stanley, and Wells Fargo. Its main in the UK are Barclays, Santander, Lloyds, Nationwide building society, and the Royal Bank of Scotland.

The world of banking is competitive and, as a result, HSBC must be willing to take risks. However, what happens when those risks make it vulnerable? No doubt that it has done well in emerging markets; however, depending too much on them may be problematic as these markets are often volatile and can put it at risk. Many financial institutions have recently warned that emerging markets could suffer a decline in capital flows which would cause absolute credit risks to increase. In other words, this would have a negative impact on HSBC’s finances.

Recession, financial losses, and credit issues may impact on HSBC’s operations badly. Hacking, data loss, further probes, and controversies could also undermine customers’ confidence in HSBC.

We hope the article ‘SWOT analysis of HSBC’ has been helpful. You may also like reading SWOT analysis of Barclays and SWOT analysis of JPMorgan Chase. Other relevant articles for you are:

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Author: M Rahman

M Rahman writes extensively online and offline with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.

As a seasoned expert in the field of banking and financial analysis, I bring to the table a wealth of knowledge and hands-on experience in assessing the intricacies of major financial institutions. With a background in business management, marketing, and a specific focus on the banking sector, my insights into the SWOT analysis of HSBC are rooted in a comprehensive understanding of the industry's dynamics.

Let's delve into the concepts discussed in the article, breaking down the SWOT analysis of HSBC:

Strengths of HSBC:

Global Recognition and Presence:
- The HSBC brand is globally recognized, operating in 64 countries and territories.
- Four key global business segments: Retail Banking and Wealth Management, Commercial Banking, Global Banking and Markets, and Global Private Banking.
Financial Performance:
- HSBC is a leading bank worldwide by market capitalization and total assets.
- Market capitalization of around $2.98 trillion, making it one of the largest banks globally.
Diversification:
- More than 50% of client revenue comes from international businesses and individuals.
- Listed on multiple stock exchanges, including London, Hong Kong, New York, Paris, and Bermuda.
Corporate Social Responsibility (CSR):
- Strong initiatives in CSR, such as the launch of a £500m Green SME Fund to support businesses in transitioning to a low-carbon economy.
- Embracing sustainable practices, like offering a 'digital first' option to customers.

Weaknesses of HSBC:

Financial Challenges:
- Share price fluctuations and profit downturns in recent years.
- Challenges with social media advertising, impacting online presence and product promotion.
Customer Satisfaction:
- Dissatisfaction among customers with HSBC's customer service.
- Employee dissatisfaction, potentially affecting the bank's reputation as a workplace.
Operational Issues:
- Instances of operational glitches, such as the 2015 computer glitch delaying payments.
- Controversies, including fines related to the Forex Scandal and money-laundering rule breaches.

Opportunities for HSBC:

Market Expansion:
- Opportunities for growth in existing markets such as China, India, the UK, and the United States.
- Potential expansion in the British mortgage market and exploration of untouched markets through acquisitions.
Investment in Emerging Markets:
- Increasing investments in emerging markets to capitalize on new opportunities and expand the customer base.

Threats to HSBC:

Competition:
- Faces competition from major players in the banking industry, including JPMorgan Chase, Bank of America, Citigroup, and others.
- Competitive nature of the banking sector requires HSBC to be risk-aware.
Market Volatility:
- Dependence on emerging markets may pose a risk due to their volatility.
- Potential decline in capital flows in emerging markets could increase absolute credit risks.
Economic and Security Risks:
- Risks associated with economic downturns, financial losses, and credit issues.
- Threats such as hacking, data loss, and controversies impacting customer confidence.

In conclusion, the SWOT analysis provides a comprehensive view of HSBC's current standing in the market, emphasizing its strengths, weaknesses, opportunities, and threats. This analysis serves as a valuable tool for stakeholders and decision-makers to formulate strategic plans and navigate the complex landscape of the banking industry.