NEW YORK, NY--(Marketwire - Dec 12, 2012) - Several banks have been doing a stellar job of late despite the persistently low-interest rate environment and a number of other challenges. Net interest margins remain pressured for a number of industry players, but some banks have also reported increased loans and deposits, which is an encouraging sign. Companies with a strong international presence, such as Citigroup Inc. (NYSE: C) and HSBC Holdings plc (NYSE: HBC), also look well positioned, as they can better take advantage of emerging markets while also lessening the impact of regions that are struggling. Select companies, such as HSBC, have also been facing some individual challenges, but look well positioned to grow moving forward. A recovering U.S. housing market could also be a boon for several companies in the industry. Low-interest rates have made loans attractive to potential home buyers, and an over-heated rental market is also driving consumers back to home ownership.
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HSBC has been making headlines of late, as it stated that it has come to an agreement with U.S. authorities over inadequate compliance with anti-money laundering and sanctions laws. The company also announced that it has reached an agreement to attain a worldwide resolution with all other U.S. government agencies relating to the aforementioned issues. The company will make moves to improve its compliance policies and procedures and will make payments that come to $1.921 Billion. The company has made a number of changes to its senior leadership since the compliance issues occurred and appears to be on solid ground to move forward.
HSBC's wide global reach has been particularly beneficial during the uncertain economic times that the Eurozone is currently experiencing, as other areas have improved while Europe's economy continues to flounder. The recovery in the U.S. looks poised to help the company grow, and the economies of Mexico and several countries in the Middle-East are also promising. The company has also been in the news regarding some of its operations in the Asia/Pacific region, as Global Payments Inc. recently stated that it has acquired the remaining 44% interest of its Asia/Pacific joint venture with The Hong Kong and Shanghai Banking Corporation Limited, a subsidiary of HSBC Holdings plc. Global payments will pay HSBC $242 million, and the two companies will remain strategic partners for card acquiring services in the region.
Citigroup also has a global footprint, which in these times of economic duress, it has been using to its advantage. The company is well positioned to capitalize on the growing middle-class in China, and it is also established in the growing markets in Latin America. The company also offers a wide array of products and services, which have helped it to excel. Citigroup is also looking to streamline operations, and in an attempt to improve efficiency and reduce costs, the company newly announced a number of upcoming actions to better position itself. While the pre-tax charges associated with the repositioning are expected to be around $1 billion for the upcoming quarter of 2012, expense savings in 2013 and beyond are estimated to easily outweigh the costs. Interested investor should mark down January 17th on their calendars, as Citigroup is scheduled to release its fourth quarter results on the date.
The turbulent macroeconomic climate continues to create challenges for banks but industry players seem well equipped to deal with them at this time. Those offering a broad range of products and services could outperform their peers moving forward, and a diverse geographical reach also bodes well. Increased loan activity and more deposits are a plus for banks, though low-interest rates are somewhat of a hindrance.
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