HSBC (LSE: HSBA) has been something of a laggard among FTSE 100 bank shares this year. Its 12.3% gain pales in comparison to the monster rises of NatWest (+66.1%) and Barclays (+56.6%).

Yet at 713p, the HSBC share price is still near a six-year high. So shareholders can’t grumble too much.

Double-edged sword

To invest in HSBC, you have to be bullish on Asia (HSBC stands for Hongkong and Shanghai Banking Corporation, after all). The region generates roughly half the bank’s revenue and over half of its profits.

This year, it doubled down even further by selling its Canadian business and buying Citigroup‘s wealth management division in China.

In recent times though, this focus on the world’s fastest-growing region has been a double-edged sword. China’s economy has struggled to return to eye-popping growth after the pandemic, while its property sector has been in crisis mode for what seems like an eternity.

Sluggish Western economies have also impacted those in Asia through reduced demand for exports.

Looking ahead, US-China relations could sour further, giving the bank more geopolitical headaches to contend with. The Chinese economy, which is beset by a rapidly ageing population and high youth unemployment, could be set for underwhelming growth relative to its past. Neither would be great for HSBC.

Peak earnings

In Q3, the bank’s pre-tax profit rose 9.9% year on year to $8.48bn, smashing expectations for $7.6bn. But the record profits that it and other lenders have been reporting don’t look to be sustainable as interest rates come down. So the firm’s earnings have probably peaked.

The good news here is that the market already knows this and the stock is probably valued accordingly. It’s trading on a forward price-to-earnings multiple of 7.5 and a price-to-book ratio of 0.97.

The latter indicates that investors are currently paying slightly less than the book value of the bank’s assets. And that valuation is a discount to large US peers.

Meanwhile, the dividend yield is 6.8%, which is higher than other FTSE 100 bank stocks. Pair this with HSBC’s massive share buybacks (another $3bn just announced), and I reckon the stock is good value. Though at a six-year high, I wouldn’t go so far as to say it’s an absolute steal.

Still bullish on Asian economies

Due to its high yield, I have HSBC in my dividend portfolio. But I also like its focus on Asia. Long term, I still think higher-growth economies like India and China should result in strong earnings for the bank.

Plus, the firm’s increasing focus on wealth management could prove lucrative. There was strong growth in wealth management fees in Q3, and these tend to be less sensitive to interest rate changes.

By 2030, Asia’s middle class is expected to swell to over 1bn people, representing nearly two-thirds of the global middle class. This means there’s a growing pie for HSBC to get its fingers into.

Therefore, I’m happy to have the stock in my portfolio over the long term. If it dips in the months ahead as interest rates are cut, then I’ll top up my holding.