HSBC SWOT Analysis

This SWOT analysis looks at HSBC Group, described as one of the world's leading financial institutions with banks located throughout the world, has recently seen profits decline more than expected. Participating in the global banking industry means that HSBC can take advantage of many opportunities and expand its market share, but it also must contend with situations like recessions, volatility, and credit crises as was seen in recent years. This means that it should potentially reconsider its strategy by examining its strengths and weaknesses in conjunction with opportunities and threats in the marketplace.

  • The bank is considered to be well capitalised, which means that it has been able to withstand economic volatility and some of the credit crises that impacted its competition.
  • Being well-capitalised means that it will not have to rely on government assistance when these types of crises arise again.
  • The bank has established itself in a number of emerging markets over its competition, creating a strong position prior to other bank entrants.
  • Its diverse portfolio of locations and financial products means that it can dilute risk more so than other banks.
  • The bank has undertaken many cost-cutting measures to make its operations more efficient and increase its long-term profitability.
  • HSBC has entered some new financial markets and added new financial products and instruments that have recently helped increase revenue streams to offset losses in others.
  • HSBC association with the small business sector has made it vulnerable to more risk, which could lead to profit shortfalls.
  • The bank was involved with sub-prime markets in the US and also experienced a financial scandal in 2012, which has somewhat damaged the brand's reputation and it has yet to recover completely from those missteps. Recently, it was also announced that HSBC is being investigated into possible foreign exchange trade market manipulation, which does not help its attempts to fix its reputation.
  • The company has announced layoffs as part of some of its cost-cutting measures, which has furthered a negative opinion of the bank both with its retained talent and its stakeholder base.
  • HSBC's branding has been focused on positioning itself as a global bank, losing connection with its local audiences due to the homogenised image it is creating that does not acknowledge local needs.
  • HSBC's strong capitalisation position will help it to acquire additional assets to further strengthen the bank and sustain its business model.
  • HSBC has the opportunity to gain market share and a foothold in emerging markets through acquisitions, including Bank Ekonomi in Indonesia and similar banks in target emerging markets.
  • HSBC's growing global position can help minimise the impact of external forces like financial and credit issues that tend to impact the competition. This also provides for the opportunity to position its brand as a reliable and safe place to invest money, thereby furthering its lending capabilities.
  • Negative press coverage of competitors has often overshadowed HSBC's own missteps, providing the opportunity to focus on further cleaning up its own image and putting any scandals or probes out of their customers and prospects' minds. This may include the introduction of a formal corporate social responsibility programme to oversee transparent and ethical decision making and actions throughout the bank's operating environment.
  • The threat of financial losses, credit issues, and unethical behaviour among the world's banks and financial institutions means that HSBC could be threatened by prospects and customers' fears of losses may lead to a shrinking pool of prospects and customers.
  • The global credit crunch has led to challenges for all banks in terms of lending products for many of its customer base, reducing the ability to lend to many prospects.
  • The ongoing defaults in the housing industry due to reduced home values and rising interest rates can further threaten HSBC's profitability.
  • Further probes and scandals could undermine confidence in HSBC.
  • Further regulatory changes in the countries where HSBC does business could also threaten the company's profitability. The company may also have to change its reporting mechanisms and provide more evidence of its lending, banking, and investment practices.