HSBC Annual Results 2019 media release

[Arborbridge]

Well, it's a fairly crude measure I admit, but net income per employee is a good indication of the margins enjoyed by a company given the wage bill is deducted directly from the top line. And to be honest, I don't see the need for your sarcastic tone or that stupid rolled eyes emoji. Why is this board always so unfriendly?

I apologise: maybe I got out the wrong side of bed.
Anyhow, your original comment seemed to warrant a re-joinder of some sort because all you commented on was the number of employees and nothing about income per employee. And to compare with a totally different business didn't seem all that smart either.

I'm not normally unfriendly, but just saw red for some reason, at your comment that a big company with a big number of people employed, must necessarily have too many people without any reasoning to back it up. It just seemed a lazy missile for the sake of it.

Arb.

[Arborbridge]

That would presumably be the income that has remained unchanged in nominal terms for the last five years. What is that in real terms, a 12% drop? Looking at the results announcement I can see little chance of an increase in the nominal income from HSBC any time soon, so in real terms it will continue to fall.

That is not to say you are not right to hang on to the shares, just that I think you should not take too much comfort from the income HSBC is providing. But better than a lot of the shares that have cut which I seem to own of course.

HSBC earned some brownie points during the banking crisis as being the best survivior and one which carried on paying dividends. Maybe that point score has now been used up amongst HYPers. Even Dod, who has always extolled HSBC seems to have all but abandoned it now.

Arb.

[Dod101]

Well of course HSBC still has some strong points but I must say that the new management are doing all they can to put me off and as I think I said yesterday, I am getting increasingly fed up of the number of my shares where the dividend has been static for a long while. I think it may be time to consider a strategic review of my own and take some money out of those shares but not now at the current low levels of HSBC and Shell at least.

Dod

[IanTHughes]

There is no obligation for any private investor to invest in the shares of banks although it seems to be part of the standard HYP rules/dogma.

The HYP Strategy does not include any requirement that a portfolio must include a Bank share, nor indeed is any Business Sector mandatory.


Ian

[Arborbridge]

Well of course HSBC still has some strong points but I must say that the new management are doing all they can to put me off and as I think I said yesterday, I am getting increasingly fed up of the number of my shares where the dividend has been static for a long while. I think it may be time to consider a strategic review of my own and take some money out of those shares but not now at the current low levels of HSBC and Shell at least.

Dod

I think we may well be up the creek this year if we are hoping for much of an income in portfolio income, and that was indicated in all the forecasts before Christmas. The world situation is grim, made grimmer for us by the dreaded B word and the uncertainty it brings. Thevarious negotiators strutting the stage like fighting cocks do nothing to help business confidence.

Arb.

[simoan]

Anyhow, your original comment seemed to warrant a re-joinder of some sort because all you commented on was the number of employees and nothing about income per employee. And to compare with a totally different business didn't seem all that smart either.

I definitely mentioned revenue per employee. That's a reasonable measure but profit per employee is better. If you want to see a really efficient company you should do the sums for Fevertree! HSBC provided some numbers for cost saving in the RNS today i.e. they will terminate 35,000 employees and save $4.5bn, that's an average of $128k per employee. That sure is highly paid deadwood, hopefully more to come for shareholders!

All the best, Si

[dealtn]

Anyhow, your original comment seemed to warrant a re-joinder of some sort because all you commented on was the number of employees and nothing about income per employee. And to compare with a totally different business didn't seem all that smart either.

I definitely mentioned revenue per employee. That's a reasonable measure but profit per employee is better. If you want to see a really efficient company you should do the sums for Fevertree! HSBC provided some numbers for cost saving in the RNS today i.e. they will terminate 35,000 employees and save $4.5bn, that's an average of $128k per employee. That sure is highly paid deadwood, hopefully more to come for shareholders!

All the best, Si

Well if we want to play the revenue per employee game you could try the REIT's. Take BLND for instance, that would beat Fevertree I'm sure. I don't think it says much about efficiency per se. I would postulate it just shows how different sectors and companies with different structures can look if using numbers alone.

Which is a long winded way of saying that Banking is just so different to other sectors, and indeed the past, now that the capital requirements that are demanded of it are much more stringent. It is only to be expected that managements are looking at the cost base, and specifically number of employees.

[idpickering]

There is no obligation for any private investor to invest in the shares of banks although it seems to be part of the standard HYP rules/dogma.

There is no such 'rule/dogma' that says a HYPer has to have a bank. For me, they appeared as a high yielding share on a screening I did years ago, as did Lloyds, so I bought both.

Ian.

[Arborbridge]

I definitely mentioned revenue per employee.
All the best, Si

You may have thought you mentioned revenue per employee, but you didn't. Here is the full post to which I was replying:-
February 18th, 2020, 11:30 am
Well I was staggered this morning to find out that HSBC has around 235,000 employees worldwide - that's about the same as Apple and Alphabet combined. What a bloated and overweight organisation... and I heard someone say on R4 this morning that laying off 35,000 was a savage cut. Surely there must be more savage cuts to come?

All the best, Si

Sorry to labour the point, but you didn't. If it was mentioned in some earlier post, I'm sorry to have missed it - but the post to which I replied is quoted above. You may have wanted to draw some comparison in that way to Apple etc, but you did not do so in this post and if you wanted to, then why leave people to guess at what you intended rather than being specific?
I'm not even convinced that a comparison of this type is very useful when it's between companies operating in different types of industries. I suspect that if we relied on this as an indicator, we might only buy three or four shares because all the rest would fall short!

However, I'm not here to defend HSBC, only to factually rectify your post quoted above.

[Wizard]

This is beginning to read more like a thread on Polite Discussion than HYP Practical

[moorfield]

This is beginning to read more like a thread on Polite Discussion than HYP Practical

Well back on topic, let me take the contrarian pov here (no one else has, it would seem): as a builder, I welcome the opportunity to buy more HSBA, which I expect to be still holding and funding my retirement in 20-40 years time, more cheaply.

The gap in yields between my banking preference shares (SAN, 6.1%) and ordinary shares (HSBA, 7.1%) is now wider than it has ever been. I don't see much more upside in the SAN share price so may well swap all of these for HSBA over the next couple months.

[Alaric]

The gap in yields between my banking preference shares (SAN, 6.1%) and ordinary shares (HSBA, 7.1%) is now wider than it has ever been. I don't see much more upside in the SAN share price so may well swap all of these for HSBA over the next couple months.

The other side of that coin is that the longer HSBC leaves the dividend unchanged and the less likelihood there is of a dividend increase, then the more the Ordinary shares start to resemble the Prefs. If they have a higher yield, is it because the Ordinary shares have a higher risk of default in the sense of a dividend cut than the Prefs?

[moorfield]

If they have a higher yield, is it because the Ordinary shares have a higher risk of default in the sense of a dividend cut than the Prefs?

Maybe. Maybe not. What I do know is that my prefs will be paying me the same income in 2050 as they are now. I'm willing to hazard a wager that HSBA will be paying me a lot more then than they are now, regardless of what happens or doesn't in the next few years.

[Dod101]

If they have a higher yield, is it because the Ordinary shares have a higher risk of default in the sense of a dividend cut than the Prefs?

Maybe. Maybe not. What I do know is that my prefs will be paying me the same income in 2050 as they are now. I'm willing to hazard a wager that HSBA will be paying me a lot more then than they are now, regardless of what happens or doesn't in the next few years.

Well I am happy to wager that however well I feel at the moment I will not be around in 2050 to see the outcome. I am much more concerned about the outcome over say the next 3 years than the next 30. Changes the mindset somewhat.

Dod

[moorfield]

Well I am happy to wager that however well I feel at the moment I will not be around in 2050 to see the outcome. I am much more concerned about the outcome over say the next 3 years than the next 30. Changes the mindset somewhat.

Dod

It does indeed, but that raises a question probably best discussed elsewhere. Either (i) HYP is not right for you and you should look at ITs and/or fixed income for your income needs, or (ii) your overall HYP provides much more income than you need that you can afford not to be too concerned.

I am planning (ii) will apply come my own target retirement date, see viewtopic.php?p=266580#p266580

[Dod101]

Well I am happy to wager that however well I feel at the moment I will not be around in 2050 to see the outcome. I am much more concerned about the outcome over say the next 3 years than the next 30. Changes the mindset somewhat.

Dod

It does indeed, but that raises a question probably best discussed elsewhere. Either (i) HYP is not right for you and you should look at ITs and/or fixed income for your income needs, or (ii) your overall HYP provides much more income than you need that you can afford not to be too concerned.

I am planning (ii) will apply come my own target retirement date, see viewtopic.php?p=266580#p266580

I can say that (ii) fits my situation but none of us can afford to be complacent. I am not allowed on this Board to question the suitability of a HYP for any age but I am sure that it is not as easy to construct a reliable HYP in the current climate as it was say in 2000. It is actually quite liberating and allows me and those in my position not to be a slave to concentrating on income as the sole goal.

Dod

[mao44]

I it correct that HSBC are suspending the dividend for 2020 and 2021 due to the costs of its restructuring. Or is that share buy backs?

[IanTHughes]

I can say that (ii) fits my situation but none of us can afford to be complacent. I am not allowed on this Board to question the suitability of a HYP for any age but I am sure that it is not as easy to construct a reliable HYP in the current climate as it was say in 2000.

The HYP Strategy recommends that one purchases a portfolio that contains 15 - 20 shares that offer the highest sustainable yield, subject of course to appropriate diversification.

It is obvious therefore that, although at times the yield on offer will differ, surely it is always possible to find 15 - 20 shares that offer the highest sustainable yield?


Ian

[monabri]

I it correct that HSBC are suspending the dividend for 2020 and 2021 due to the costs of its restructuring. Or is that share buy backs?

It is the share buy backs that are being suspended.

They say they intend to maintain the dividend.

https://www.hsbc.com/-/files/hsbc/inves ... elease.pdf

[Dod101]

I it correct that HSBC are suspending the dividend for 2020 and 2021 due to the costs of its restructuring. Or is that share buy backs?

It is the share buy backs that are being suspended.

They say they intend to maintain the dividend.

https://www.hsbc.com/-/files/hsbc/inves ... elease.pdf

That is what they say. Whether the dividend is maintained or not, only time will tell.

Dod