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HSBC Case Study Report

The HSBC case study provides an overview of the bank's history, main products, strategies, and competitive landscape. It highlights financial performance from 2016 to 2018, showing improved profitability and stable liquidity, while noting some efficiency challenges. Additionally, the study discusses a regtech pilot project aimed at enhancing operational risk management through AI and big data analysis.

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18 views6 pages

HSBC Case Study Report

The HSBC case study provides an overview of the bank's history, main products, strategies, and competitive landscape. It highlights financial performance from 2016 to 2018, showing improved profitability and stable liquidity, while noting some efficiency challenges. Additionally, the study discusses a regtech pilot project aimed at enhancing operational risk management through AI and big data analysis.

Uploaded by

mohdsalahfouad
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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2025

Individual Case study HSBC


Contents
HSBC Case Study Report..........................................................................................................................................1
1. Bank Overview................................................................................................................................................... 1
2. Bank Main Products.........................................................................................................................................1
3. Bank Strategies.................................................................................................................................................. 1
4. Bank Main Competitors..................................................................................................................................2
5. Bank Industry..................................................................................................................................................... 2
6. Summarization of the Use Case...................................................................................................................2
7. Financial Analysis for 2016, 2017, 2018................................................................................................3
7.1 Profitability and Efficiency Ratios......................................................................................................3
7.2 Liquidity, Leverage, and Solvency Ratios........................................................................................3
7.3 Other Ratios................................................................................................................................................. 4
Summary.................................................................................................................................................................... 4
HSBC Case Study Report

1. Bank Overview
Founded in 1865, HSBC is one of the world's largest financial institutions with a primary
focus on financing international trade. It operates across 70 countries, with its headquarters
in London. HSBC has grown through acquisitions and diversification, amassing over $2.6
trillion in assets as of 2019. The bank serves over 235,000 employees globally and caters to
millions of customers across retail, commercial, and private banking sectors.

2. Bank Main Products


HSBC’s product offerings span multiple financial categories:
1. Retail Banking and Wealth Management:
- Personal banking
- Mortgages
- Savings and investment services
- HSBC Premier and Advance services for affluent customers

2. Commercial Banking:
- Working capital solutions
- Payment services
- Trade finance
- Mergers and acquisitions advisory

3. Global Banking and Markets:


- Capital markets services
- Transaction banking
- Risk management products

4. Global Private Banking:


- Investment management
- Estate planning
- Advisory services for high-net-worth individuals

3. Bank Strategies
1. Operational Risk Management: HSBC invests heavily in improving its risk management
systems, particularly after compliance failures.
2. Digital Transformation: HSBC emphasizes leveraging technologies such as regulatory
technology (regtech) to improve compliance and efficiency.
3. Market Simplification: By exiting certain markets and segments, HSBC has reduced
complexity to focus on high-growth areas.
4. Cultural Revamp: HSBC has implemented training and governance structures to foster a
risk-aware organizational culture.
4. Bank Main Competitors
- Global Competitors:
- JPMorgan Chase (US)
- Bank of China (China)
- BNP Paribas (France)
- Mitsubishi UFJ Financial Group (Japan)
- Regional Competitors:
- Lloyds Bank and Barclays (UK)
- ICBC and CCB (Asia)

5. Bank Industry
HSBC operates in the global banking and financial services industry, which has been
undergoing transformation due to increased regulatory scrutiny post-2008 financial crisis.
Emerging fintech competitors challenge traditional banks with leaner, more innovative
solutions. Regulatory demands and economic pressures necessitate efficient operations and
a robust risk management framework.

6. Summarization of the Use Case


HSBC explored a regtech solution developed by a startup that used AI and big data to
analyze employee communication patterns for operational risk management. The pilot
project analyzed metadata from email communications to identify risk-related behavior.
The use case aimed to:
- Enhance the efficiency of the 3LoD model.
- Provide proactive risk signals.
- Reduce operational losses and compliance failures.

The pilot revealed promising insights but highlighted challenges related to cultural
acceptance, scalability, and the nascent nature of the technology.
7. Financial Analysis for 2016, 2017, 2018

7.1 Profitability and Efficiency Ratios

Ratios 2016 2017 2018 Ratios

Gross profit margin = Gross profit / Sales 76% 77% 70% profitability
Operating profit margin = EBIT / Sales 7.3% 21% 23% profitability
Net profit margin ( net income / sales ) 5.27% 17.00% 19.91% profitability
Sales growth rate - 7% 8% profitability
Asset turnover ratio ( sales / total 0.03 0.03 0.03 efficiency
assets ) Times
Asset conversion cycle period = ( INV + 898.70 1,053.09 1,174.26 efficiency
AR ) days
Asset conversion cycle COST = COGS / 38,676.8 46,397.4 73,534.5 efficiency
ACC
PP&E turnover ratio ( Sales / PP&E ) 1.10 1.04 0.68 efficiency
Times

 Gross Profit Margin: Slight decline, indicating costs increased or efficiency


decreased.
 Operating Profit Margin: Significant improvement, showing better cost control.
 Net Profit Margin: Strong growth, indicating effective management.
 Sales Growth: Revenue steadily increased, with faster growth in 2018.
 Asset Turnover Ratio: Remained steady, showing consistent asset use.
 Asset Conversion Cycle: Took longer to turn assets into cash.
 PP&E Turnover Ratio: Decreased, showing less effective use of property and
equipment.

7.2 Liquidity, Leverage, and Solvency Ratios

Ratios 2016 2017 2018 Ratios


Current Ratio 1.13 1.15 1.15 liquidity
Quick Ratio 1.13 1.15 1.15 liquidity
Working capital ( CA - CL ) 267,131 321,295 313,654 liquidity
Financial leverage ( Total assets / equity ) 13.54 13.26 13.73 leverage
leverage ratio = liab / equity 12.50 12.21 13.48 leverage
Debt to equity = debt / equity 0.88 0.97 0.45 Solvency

 Current and Quick Ratios: Stable, showing good short-term liquidity.


 Working Capital: Increased in 2017 but slightly dropped in 2018.
 Financial Leverage: Remained consistent without major changes.
 Leverage Ratio: Slight increase, showing more financial risk.
 Debt-to-Equity Ratio: Sharp drop, showing reduced reliance on borrowing.

7.3 Other Ratios

Ratios 2016 2017 2018


ROA =net profit margin * total asset turnover 0.001 0.005 0.006

ROE = net profit margin * total asset turnover * 1.96% 6.24% 8.07%
financial leverage
EVA = operating income - cost of capital 18,741.00
MVA = Market Capitalization - Book value 24,405.00

 Return on Assets (ROA): Showed small improvements.


 Return on Equity (ROE): Strong gains, benefiting shareholders.
 EVA and MVA: Positive results indicated value creation for investors.

Summary
 Profitability improved from 2016 to 2018, benefiting shareholders.
 Some efficiency issues emerged, especially in asset use.
 Liquidity remained steady, and the bank became less dependent on debt.

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