HSBC's reported Australia sale has legs, says analyst
Published: 11:37 07 Jul 2025 BST
HSBC Holdings PLC (LSE:HSBA) is reported to be examining the sale of its Australian retail banking business, which analysts at UBS said could add some potential upside.
At the end of last week, the lender was said to be days from releasing documents for the sale of its Down Under retail business, while retaining the more internationally connected corporate and commercial segment.
This follows up on a Bloomberg piece early in the year that a strategic review was underway.
A sale of the Australian business could be potentially an area of focus as part of HSBC CEO Georges Elhedery’s simplification strategy, which aims to narrow its focus onto retail and commercial banking in its two home markets of Hong Kong and the UK, along with internationally connected corporate and retail and wealth customers elsewhere.
An Australian retail business with 1-1.5% market share and returns below the mid-teen HSBC group target, "could be viewed as a potential sale", UBS said in a note to clients.
While local media reports indicate some major banks may show interest, UBS pointed out that NAB and ANZ are currently focused on integrating recent acquisitions, while Westpac is focused internally under its new CEO.
"Therefore we see the regional banks and other foreign banks are more likely candidates."
Among European lenders that might be interested, UBS said ING has significant growth ambitions in Australia as detailed at its latest capital markets day, with a meaningful presence in the country already and a recent reduction in pace of the group share buyback taken by some as indicating a higher probability of M&A.
With HSBC shares trading at 9.3x FY26 earnings and offering a 5.3% dividend yield and 8.4% distributed yield, potential disposals in Australia and elsewhere "suggest some potential upside to capital generation and distributed yield estimates in our view", said UBS.
