Key Morningstar Metrics for HSBC Holdings
- : GBX 1,490Fair Value Estimate
- : ★★★Morningstar Rating
- : NarrowMorningstar Economic Moat Rating
- : MediumMorningstar Uncertainty Rating
HSBC has agreed to sell its AUD 36 billion Australian home and personal loan portfolio to Blackstone, with completion expected in the first half of 2027. The consideration comprises the portfolio value plus eligible originations from Jan. 31 to Aug. 14, 2026.
Why it matters: The move was widely expected, as HSBC has been reviewing its Australian retail business for some time. The bank will also gradually wind down its remaining retail operations in Australia over the next 18 months while continuing to invest in its corporate and institutional banking franchise.
- The deal is consistent with HSBC’s ongoing simplification strategy, focusing on markets where it has a clear competitive advantage while maintaining its network to serve corporate and institutional clients.
- HSBC expects a loss of less than USD 0.1 billion, restructuring costs and write-offs of USD 0.3 billion, and a USD 0.3 billion recycling of foreign currency translation reserve losses through the income statement, to be recognized between 2026 and 2028. We expect the overall financial impact to be immaterial.
The bottom line: We maintain our fair value estimate of GBX 1,490/HKD 158/USD 101 for narrow-moat HSBC, as our forecasts are largely unchanged. We think the shares are now fairly valued.
- Our valuation implies a 2026 price/book ratio of 1.9 times, supported by an average return on equity of 15% over 2026-30. The benefits of stronger capital generation from the wealth business appear largely priced in.
Coming up: HSBC will report interim results on Aug. 4. Key areas of focus include any changes to net interest income guidance, wealth management momentum, and updates on the resumption of buybacks following the three-quarter pause following the announcement of the Hang Seng Bank privatization proposal.
