SWOT analysis of HSBC

STRENGTHS:

Hsbc is one of the best well capitalised banks and that is why it is least affected by the recent economic events as compared to the others bank. As well capitalised, it also needs to borrow less money from the government hence more autonomy. Despite of the economic instability around the world hsbc is performing well, which will help in its future growth.hsbc is most profitable banking corporation (last year’s -$20.97bn). The banks spread in Asia, Europe and Africa helps in decreasing and also offers economies of scale. Despite of rebranding of hsbc recently it is still well established brand and valuable within the industry. It is also valued by customers; it has 128 million customers around the world.

Hsbc is well established multinational company so it can also advise other companies for going international. With Offices around the world, for the cosmopolitan client, HSBC often cannot be beaten in this area.

WEAKNESSES:

Hsbc bank strongly relates itself with small business investments, but due to current economic situation it has become more risky, so now it has to compromise the levels of activities in the areas of operations.

Despite fall in the uk interest rates hsbc has increased its mortgage rate that might not sound good to the borrowers and potential borrowers. Te depressed housing market might lead to more number of default borrowers as the pressure on them will increase with the increase in the mortgage rates.

HSBC is a global brand but it might perceived negatively by the customers and people in its implication of homogenisation and lack of personalisation.

Hsbc worked under different brand names in different countries eg: (Hong Kong Bank of Canada, British Bank of the Middle East, etc).in 1998 they were all branded together, but despite of this action the previous lack of branding and name change may hurt HSBC in brand recognition.

OPPORTUNITIES:

In the Middle East banks are scared of entering, however hsbc has run its business there locally and has been rewarded for its efforts with many rewards and honours. Hsbc has also taken the advantage of Iraq’s new democracy by entering the banking market there.

In emerging economies hsbc is doin well and has a great chance to do better countries like China, India and Brazil. The spending power of the middle class people in these countries is increasing. Before many of them did not even have a bank account.

The company’s high level of capitalisation place enables it to acquire new assets. At present banks might find trading condition difficult, so hsbc can either acquire the banks assets, technology or the whole bank itself. Hsbc has enough capital to acquire the strong bank like Bank Ekonomi in Indonesia and expand itself in ASIA.

In the present economic situation hsbc has been successful in creating its image of being the safest bank for depositors and should do a press coverage showing its achievement in such situation. Negative press coverage of competitors such as HBOS may encourage customers to choose HSBC instead.

THREATS:

1500 HSBC work went on strike in London to show that they have been paid peanuts when hsbc was making record profit. The company should take care of such strikes; it should ensure that its employees are as happy as its customers to save the company’s image.

HSBC received tens of thousands of email viruses nearly every day in the last one year. The bank is spending alot of money to prevent such viruses which can cause system wide damages. The worst day in 2004, the bank received 100,000 attacks.

Identity theft is also one big problem for the bank, hsbc has to stand in the front line and ensure its customers that online banking is safe for them. In August 2006, HSBC was accused, despite its claimed solid security; of having left its online customers unlock to a security fault for two years without fixing. Researchers at Cambridge University claimed that any HSBC account could be broken into within nine attempts.( from an article)

Trust in bank has decreased due to economic situation of the world people tend to invest more somewhere else rather than banks.hsbc has to make sure that it doesn’t lose its customer’s trust.

In the housing market , as the financial losses affecting banks and investors less credit is available to customers and the increased living expenses make the situation of less money is being saved for the customers. People save their money and borrow some from banks for buying new house but 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. The falling property market has created a rise in numbers of homeowners with negative equity.

Source: Essay UK - http://www.essay.uk.com/coursework/swot-analysis-of-hsbc.php



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