Now, HSBC says business is primed to take off, mainly because rising interest rates will boost its earnings.
Investors remain skeptical. &ldquo There&rsquo s a fundamental disconnect there,&rdquo between the optimism among HSBC executives and shareholders&rsquo unease, said  John Cronin, a banking analyst at Goodbody Stockbrokers. &ldquo I think the share price is telling you the market is very, very worried about recession risks.&rdquo This year, central banks including the Federal Reserve, European Central Bank and Bank of England have been rapidly raising interest rates to tamp down inflation. That is generally bad for corporations and households. But it is good news for banks like HSBC, which can now make more money on loans they extend to consumers and businesses.
HSBC says that development&mdash coupled with retail branch closures, office downsizing and other cost cutting&mdash will return a key measure of profitability to its highest level in a decade by next year. 
It said in August that for each percentage point jump in market-based interest rates, the money it earns annually from interest would rise by about $4.7 billion. 
&ldquo It&rsquo s revolutionary,&rdquo for HSBC that rates are rising back toward historical norms, said Alastair Ryan, a  Bank of America  banking analyst. &ldquo HSBC&rsquo s business model was just structurally really disadvantaged by that period of zero rates.&rdquo
After the 2008 global financial crisis, HSBC drastically cut back in various areas, for example, exiting its U.S. home-lending business. It has expanded in offering insurance&mdash particularly in Hong Kong, its biggest market&mdash and facilitating trade. Meanwhile, HSBC has relied less on businesses such as investment banking and credit cards that have generated big returns for its peers like  JPMorgan Chase & Co.
Now that interest rates are rising, HSBC will continue to have a big source of cheap capital&mdash the customer accounts that pay depositors little or no interest&mdash that it can use to fund lending that generates higher returns, such as mortgages. Also, HSBC has a huge pile of cash reserves at the Bank of England for which it will be paid more in interest. HSBC said in August that the amount it earns in interest&mdash net interest income&mdash is set to rise 15% this year and another 19% next year, to $37 billion.
&ldquo You&rsquo re going from a decade of unacceptably low profitability to a period of quite reasonable profitability,&rdquo Mr. Ryan said. &ldquo It&rsquo s going from a bank not working for shareholders to one that should be working pretty well.&rdquo
HSBC&rsquo s top shareholder, China&rsquo s  Ping An Insurance, has  pushed to revamp  the company in a way that would isolate its Asian operations from its operations elsewhere, in a bid to boost its share price.  HSBC, in a rebuttal, said in August that higher interest income is one reason it expects its return on tangible equity&mdash a key measure of profitability&mdash to reach 12% next year, its highest level in a decade. The bank said a restructuring would disrupt that progress. 
Rising interest rates carry their own risks for banks. The central-bank moves are designed to cool the economy by slowing demand. If loan demand weakens and borrowers default on loans, banks like HSBC stand to suffer losses.
The stakes are higher in this interest-rate cycle because rocketing inflation is forcing monetary authorities to act forcefully even when economies aren&rsquo t in great shape. In August, for example, the  Bank of England warned  that Britain&mdash one of HSBC&rsquo s biggest markets&mdash could be headed for a recession that would last five quarters.
In Hong Kong, HSBC&rsquo s share price has risen 1.5% this year through Wednesday to 47.60 Hong Kong dollars, the equivalent of $6.06. By contrast, the broader Hang Seng Index has fallen 19%. The S& P Global 1200 banks index is down 17% over the same period.
HSBC&rsquo s market capitalization&mdash or the combined value of all of its shares&mdash remains below its book value&mdash or the net value of the company&rsquo s assets that it reports in its financial statements. That suggests investors believe the company will struggle to create value for shareholders.
Manus Costello, global head of research at Autonomous Research, said that after years of HSBC missing its financial targets, investors are effectively saying, &ldquo Show me, don&rsquo t tell.&rdquo

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