HSBC Holdings (LSE: HSBA) shares are in the news headlines, and not just because of the bank’s upbeat Q3 results posted on Tuesday (29 October).

A week previously, the FTSE 100 banking giant revealed a new and simplified corporate structure.

Ever wondered whether we should think of HSBC as a UK bank, and try to compare it with the likes of Lloyds Banking Group? Or is it an international bank, focusing in the Chinese sphere? Or an investment bank, or what?

I’ve invested in bank stocks for years, and I’ve never been sure how to answer all that.

Simplify

From 1 January 2025, HSBC says it will “operate through four businesses with clear lines of responsibility“.

Those are Hong Kong, UK, Corporate and Institutional Banking, and International Wealth and Premier Banking.

The whole of the business will still be there. But hopefully this will make it easier for private investors to line things up with the rest of the market.

If it helps me to compare HSBC’s International Wealth and Premier Banking with investment manager M&G, say, that has to be a good thing.

Q3 results

At Q3 time, CEO Georges Elhedery said the bank’s “strong organic capital generation enables us to announce a further $4.8bn of distributions in respect of the third quarter, which bring the total distributions announced so far in 2024 to $18.4bn“.

I love to see a company with so much free cash it can keep returning it to shareholders like that. It comes as HSBC has just completed its previous share buyback. And we’re looking at a forecast dividend yield of 7% here.

Also, HSBC continues to “target a mid-teens return on average tangible equity (‘RoTE’) in 2024 and 2025“. And it aims to “manage our CET1 capital ratio within our medium-term target range of 14% to 14.5%, with a dividend payout ratio target basis of 50% for 2024“.

I like the sound of that.

Uncertainty

The thing I’m most unsure of now, though, is how HSBC’s new structure will develop in the coming years.

As well as making individual business areas clearer to investors, it must also make possible future moves for the bank easier. Might we see a pull back from UK banking?

Could it enable closer ties to the Chinese economy, with Hong Kong operations within arm’s reach as a new business unit? This is all a fear, especially as economic ties between the West and China become ever more strained.

In short, I just don’t know what HSBC will look like in 10 years. And I think I have a much better clue where Lloyds and Barclays are likely to be.

Valuation

Maybe this uncertainty lies behind HSBC’s low valuation.

With a forecast price-to-earnings (P/E) ratio of only 7.5 for the current year, dropping to 7.1 by 2026, the stock does look cheap.

And the big dividend is very tempting.

I rate HSBC as one that long-term income investors might do well to consider buying. But for now, I’m playing the watch-and-wait game.