February 27, 2012

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Bank Hold
HSBC Reports Profit Increase, ValuEngine.com Rates it a HOLD HSBC HOLDINGS is one of the largest banking and financial services organizations in the world. Through an international network linked by advanced technology, including a rapidly growing e-commerce capability, HSBC provides a comprehensive range of financial services: personal financial services; commercial banking; corporate, investment banking and markets; private banking; and other activities. HSBC reported earnings in London this morning and saw a 28% increase in net profit. However, like so many financial firms, the shares have a long way to go to return to their high-flying/pre-crisis levels. Our Valuation Model finds the stock to be modestly overvalued while the longer-term forecast picture remains weak. ValuEngine has issued a HOLD recommendation for HSBC HOLDINGS on Feb. 27, 2012. Based on the information we have gathered and our resulting research, we feel that HSBC HOLDINGS has the probability to ROUGHLY MATCH average market performance for the next year. The company exhibits ATTRACTIVE company size and P/E ratio, but UNATTRACTIVE expected EPS growth and market valuation. Based on available data as of Feb. 27, 2012, we believe that HBC should be trading at $40.08. This makes HBC 13.78% overvalued. Fair Value indicates what we believe the stock should be trading at today if the stock market were perfectly efficient and everything traded at its true worth. For HBC, we base this on actual earnings per share (EPS) for the previous four quarters of $6.30, forecasted EPS for the next four quarters of $4.58, and correlations to the 30- year Treasury bond yield of 3.10%.

ValuEngine Forecast Target Price*

1-Month 3-Month 6-Month 1-Year 2-Year 3-Year 45.61 45.93 45.89 45.8 42.18 37.74

Expected Return
0.02% 0.73% 0.64% 0.45% -7.51% -17.24%

Valuation & Rankings

Valuation 1-M Forecast Return 12-M Return Sharpe Ratio 5-Y Avg Annual Return Volatility Expected EPS Growth Market Cap (billions) Trailing P/E Ratio Forward P/E Ratio PEG Ratio Price/Sales Market/Book Beta Alpha 13.78% overvalued 0.02% -15.41% -0.37 -13.06% 34.94% -27.21% 162.96 7.24 9.95 n/a 1.54 0.98 1.21 -0.21 Valuation Rank 1-M Forecast Return Rank Momentum Rank Sharpe Ratio Rank 5-Y Avg Annual Rtn Rank Volatility Rank EPS Growth Rank Size Rank Trailing P/E Rank Forward P/E Ratio Rank PEG Ratio Rank Price/Sales Rank Market/Book Rank Beta Rank Alpha Rank 24 53 38 27 38 71 7 100 95 79 n/a 45 72 45 38

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Market Overview
Summary of VE Stock Universe
Stocks Undervalued Stocks Overvalued Stocks Undervalued by 20% Stocks Overvalued by 20% 54.94% 45.06% 21.67% 17.49%

Sector
Aerospace Auto-Tires-Trucks Basic Materials Business Services Computer and Technology Construction Consumer Discretionary Consumer Staples Finance Industrial Products Medical Multi-Sector Conglomerates Oils-Energy Retail-Wholesale Transportation Utilities

Change
0.54% 0.09% -0.17% 0.22% -0.15% -1.13% 0.08% 0.52% -0.09% -0.17% 0.33% -0.02% -0.02% -0.35% -0.51% 0.01%

MTD
0.74% 4.99% 1.93% 2.38% 4.13% 3.53% 4.58% 3.37% 3.34% 2.86% 3.53% 2.38% 6.30% 3.94% 4.73% 2.26%

YTD
6.98% 19.51% 13.89% 10.38% 14.89% 15.05% 13.34% 7.89% 10.99% 13.50% 11.71% 12.53% 10.96% 11.05% 13.49% 3.86%

Valuation
11.88% overvalued 3.50% overvalued 7.78% overvalued 6.16% overvalued 26.99% overvalued 2.72% undervalued 5.83% overvalued 11.68% overvalued 18.41% overvalued 12.14% overvalued 17.46% overvalued 17.03% overvalued 11.10% overvalued 19.04% overvalued 10.30% overvalued 12.37% overvalued

Last 12P/E MReturn Ratio

-2.45% -6.74% -19.28% -0.59% -10.22% -10.98% -2.97% -3.07% -2.27% -8.15% -6.35% -1.30% -16.95% 6.69% -13.36% 2.39% 29.13 31.98 22.65 25.12 43.32 30.65 28.05 23.49 22.33 26.76 40.15 16.18 41.33 21.72 21.69 24.94