HSBC announced growth in profit after tax from $8.6 billion to $14.7 billion. What holds for the stock?

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HSBC Holdings PLC (LON:HSBA) received a major boost on Tuesday, 22 February, upon reporting the annual results for the year ended 31 December 2021. The company reported $14.7 billion in profit after tax (PAT) compared to $8.6 billion in the previous.

HSBC cites a net release of expected credit losses, lower operating costs, and revenue growth in Q4. Detailed analysis of the announcement demonstrates that though the revenues for Q4 grew on the back of improvements in UK and Hong Kong markets, the sales for the group declined 2% to 3%.

The company cites the impact of lower interest rates for the decline. Going forward, HSBC targets double profitability driven by a recovery in the global economy. Higher interest rates in response to the high inflation rates will also be a major factor in the company’s performance.

HSBC share price momentum gets a boost

Source – TradingView

Technical analysis shows that HSBC shares have been gaining after the announcement. The prevailing market valuation of $37.15 was sustainably above all the moving averages. The share’s trend funnel predicts that the share price will maintain the momentum.

However, the company is likely to find resistance at prices between $40 and $44. On the downside, it is highly unlikely that the share price would drop below the 50-day moving average of $30.

Summary

HSBC announced growth in profitability from $8.6 billion to $14.7 billion, mainly due to net positive expected credit losses. The revenues declined by 2-3%. The share price received a boost, and it is likely to maintain the moment to levels between $40 and $44.

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