Federal Bank vs HSBC Which Performs Better?

Federal Bank and HSBC are two prominent banking institutions with substantial impacts on the global financial market. While Federal Bank is an Indian private sector bank known for its strong presence in the domestic market, HSBC is a multinational banking and financial services organization headquartered in London. Both banks have their own unique strengths and weaknesses, making them interesting choices for investors looking to capitalize on the fluctuations of the stock market. In this analysis, we will compare the stock performance of Federal Bank and HSBC, highlighting key trends and factors influencing their valuations.

Federal Bank or HSBC?

When comparing Federal Bank and HSBC, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Federal Bank and HSBC.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Federal Bank has a dividend yield of 0.58%, while HSBC has a dividend yield of 10.11%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Federal Bank reports a 5-year dividend growth of 2.13% year and a payout ratio of 0.00%. On the other hand, HSBC reports a 5-year dividend growth of 0.62% year and a payout ratio of 0.00%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Federal Bank P/E ratio at 12.31 and HSBC's P/E ratio at 6.97. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Federal Bank P/B ratio is 1.56 while HSBC's P/B ratio is 0.85.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Federal Bank has seen a 5-year revenue growth of 3.06%, while HSBC's is 0.01%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Federal Bank's ROE at 13.68% and HSBC's ROE at 12.87%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are ₹203.90 for Federal Bank and $45.08 for HSBC. Over the past year, Federal Bank's prices ranged from ₹139.40 to ₹208.20, with a yearly change of 49.35%. HSBC's prices fluctuated between $36.93 and $47.56, with a yearly change of 28.78%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.