Harvey Jones owns shares in Lloyds but has been hesitant to invest in Barclays and HSBC shares as they have performed quite well recently. Is this the right time for him to act?
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Investing in Barclays Now
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I’ve been searching for a chance to invest in HSBC (LSE: HSBA) shares, and I’m quite interested in Barclays (LSE: BARC) as well. Is this the opportunity I’ve been waiting for?
I currently own shares in Lloyds Banking Group, which I purchased three years ago, and it has proven to be an excellent investment. To be honest, all the major banks have performed well.
Performance of HSBC Shares
The industry has been thriving as rising inflation and interest rates increase net interest margins, which is the difference between what banks offer to savers and what they charge borrowers. I have some extra funds in my SIPP and am contemplating dividing it between Barclays and HSBC. I believe this would complement my investment in Lloyds well.
Lloyds has primarily become a modest domestic lender concentrating on UK households and small enterprises. In contrast, Barclays and HSBC operate on a much larger scale.
Surge in FTSE 100 sectors
Harvey Jones’ Investment Strategy
Barclays continues to operate a significant corporate and investment banking division in the United States, whereas HSBC has substantial interests in Asia through Hong Kong and China. Both banks are also focusing on the Middle East. This presents opportunities, but it also introduces risks, as indicated by the current fluctuations in the market.
Barclays has emerged as one of the largest decliners on the FTSE 100, with a drop exceeding 5% this morning due to concerns surrounding Iran affecting market stability. HSBC has seen a decline of nearly 4%. Financial institutions are particularly vulnerable during times of geopolitical tension, especially these two. NatWest Group, which is focused on the UK market, has fallen by 3.3%, while Lloyds has decreased by 2.8%.
Recently, I’ve hesitated to invest in bank stocks because they have performed exceptionally well. Barclays has surged by 50% in the past year and 180% over five years, while HSBC has increased by 53% and 225% in the same time frames. I’m cautious about entering the market just as the momentum fades. Now, I’m contemplating whether the current dip might be the opportunity I’ve been looking for.
Market Insights and Recommendations
On February 25, HSBC announced a 7.4% decline in pre-tax profits for 2025, primarily attributed to exceptional items like legal costs and write-offs. Nevertheless, it still achieved an impressive $29.2 billion. Revenue increased by a modest yet steady 4% to reach $68.3 billion. The board is now aiming for a return on average tangible equity exceeding 17% by 2028, up from 13.3% in 2025.
Assessments of dividends and stock repurchases
While that’s positive news, HSBC’s price-to-earnings ratio has risen to 15.5. Decreasing interest rates may pressure profit margins, and the bank has halted share buybacks to finance its investment in Hang Seng Bank.
I’ll hold off for the moment and focus on Barclays. On February 10, the company reported a remarkable 13% increase in its pre-tax profit for 2025, reaching £9.1 billion, announced a £1 billion share buyback, and committed to returning £15 billion to shareholders over the next two years.
Due to the growth in earnings, Barclays is currently valued at a relatively low P/E ratio of 10.3, which is significantly less than that of HSBC. The trailing yield stands at only 2%, while HSBC offers 4%, indicating Barclays’ focus on share buybacks. Although I generally prefer receiving dividends, I am open to making an exception in this case. The risks associated with Barclays include unpredictable stock markets, declining interest rates, and not meeting high investor expectations.
Taking a long-term perspective, I believe both options are still worth exploring. I plan to begin with Barclays, purchasing a portion once the trading ban from The Motley Fool on stocks I’ve discussed is lifted, and then capitalize on any additional price drops. I’ll also be closely monitoring the Barclays share price.
