Comment: HSBC in order | Export slow lane

OF THE big four British banks, HSBC has most retained its basic “universal” banking model in the face of the sector’s reputational shockwaves and a regulatory confetti storm.

HSBC has most retained its basic universal banking model in the face of the sectors reputational shockwaves and a regulatory confetti storm. Picture: PA

The 12 per cent fall in interim profits and extra $234 million (£139m) hit for UK customer redress shows the bank is not immune to the headwinds of the banking climate.

But HSBC – even if has had its own post-crash problems, including laundering Mexican drug money, PPI problems and being investigated for loading the Libor dice – remains an impressive cash cow. It has stuck with the template of bestriding both developed and emerging markets worldwide, and held fast against the moves by several rivals (Royal Bank of Scotland, Barclays, etc) to somewhat brutally retrench their investment banking businesses.

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Bad debt charges – like an established pattern throughout the industry now – continue to fall, and the current dividend yield on the stock of a shade under 5 per cent is highly attractive in these days of savers basically earning coppers on their pounds.

In what remains a problematic sector for investors, there are worse investment cases than a bank that seems determined to stay the course in terms of economic spread and business mix.

When a sustained trading outcome does come, and sooner or later it must as fines for previous wrongdoing peter out and the more rigorous regulatory framework beds down, HSBC looks one of the better bets.

In terms of risk appetite, HSBC is conservatism writ large, but with the financial heft and geographic reach (particularly its Asian exposure) to weather periodic political uncertainty and downturns in revenue.

And after the sector traumas of recent years, a big and conservative banking model whose shares give a steady income stream may not be the most unattractive harbour for investors looking to anticipate a cyclical upturn.

A share price rise of just under 1 per cent yesterday on the profits fall says much. No pyrotechnics, no panic, business as normal.

Manufacturing exports recovery a tall order

FOR decades, manufacturing was the UK economy’s dowdy cousin, constantly outshone by its ritzy relative, the services sector. That began to change with a slew of positive data from the manufacturing sector over an extended period. But the latest CBI employers’ lobby survey shows one thing is stubbornly not changing: our exports remain flat.

The prospects for any early improvement look dim. Exports are squeezed between sterling’s strength and depressed demand in the eurozone.