8.8% dividend yield! Is the HSBC share price the FTSE 100’s greatest bargain?

UK banking stocks continued to fall as the market reacted to the collapse of Silicon Valley Bank (SVB). HSBC HoldingsThe price of this share of HSBA share price in US Dollar for a long time is clearly visible on the page of the share price history of this company. . And this is what it means FTSE 100 The bank offers even more blistering value for bargain hunters.

It currently trades at a forward price-to-earnings (P/E) ratio of 6.5 times. Investors can also hold 8.8% dividend yield which is in line with the current price.

In fact, could HSBC shares be the best value stock in the FTSE index today?

The fall

SVB’s failure has reminded investors of the chaos that led to the 2007/08 financial crisis. So it’s no surprise that global stock markets (and not just the banking sector) have collapsed.

It’s early days, of course. But the possibility of bankruptcy of the banking sector is seen by economists as remote. However, it is more likely that central banks may reduce the scale of interest rate hikes in order to calm financial markets.

Analyst at ATfor example, now say “the market now sees only a 50% chance of going up 25 basis points“from the Federal Reserve in March. The US benchmark rate is also now expected to cut 67 basis points by the end of 2023.

Looser monetary policy will be projected by other central banks including the Bank of England. This will be bad for HSBC as it will reduce the difference between the interest it charges borrowers and what it offers to savers.

Make a move

It is also worth mentioning that HSBC’s share price has fallen following its decision to acquire SVB’s UK operations for £1.

Susannah Streeter, analyst at Hargreaves Lansdownenoted that “shareholders may have some concerns about banks seizing assets that are already under uncertainty, especially bond exposure.“.

That concern is understandable. But HSBC believes the acquisition – which boosted real equity by around £1.4bn – will bring significant benefits.

Chief executive Noel Quinn said the move created “very strategic sense,” added that take over “strengthening its commercial banking franchise and increasing its ability to serve innovative and fast-growing companies, including in the technology and science sectors, in the UK and internationally.“.

Time to buy?

I have long been a fan of HSBC shares. But admitting to investing in banking stocks requires more thought than just a week ago. So I still believe the bank is buying?

The answer is absolutely yes. And especially after the recent share price fall, it is, in my opinion, one of the best performing stocks in the FTSE 100.

Well, HSBC’s share price may drop in a few days. But as a long-term investor, this does not stop me from investing.

The world’s largest banks appear to be healthy, and the swift response of regulators after the collapse of SVB shows how quickly the authorities will act to avoid industrial contagion.

Meanwhile, I remain convinced that Asian-focused banks like HSBC will generate market-beating profits in the coming decades. Rising levels of personal wealth in these developing regions are fueling demand for financial services. And low product penetration gives a lot of scope for growth.

If I had money to spare I would be looking to buy HSBC shares for my own portfolio.