Archived article
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
HSBC Holdings PLC on Wednesday announced further share buybacks as annual profit soared on the back of higher interest rates, though its fourth-quarter performance suffered due to an impairment.
The Asia-focused lender said pretax profit in 2023 surged 78% to $30.35 billion from $17.06 billion.
Total revenue rose 30% to $66.06 billion, from $50.62 billion. HSBC said this was driven by an increase in net interest income from all three of its global businesses, reflecting the higher interest rate environment. Net interest income rose 18% to $35.80 billion from $30.38 billion, while the net interest margin improved to 1.66% from 1.42%.
In addition, non-interest income increased by $10 billion, thanks to increased trading and $6.4 billion in fair value income, mostly in Global Banking and Markets.
Profit also got a boost from the sale of its retail banking operations in France, and the acquisition of Silicon Valley Bank UK Ltd.
In the fourth quarter, net operating income fell 11% to $13.02 billion from $14.57 billion a year before, while profit dropped 81% to $977 million from $5.05 billion, partly due to a $3.0 billion impairment related to its investment in Shanghai-based BoCom.
HSBC said it has approved a fourth interim dividend of $0.31 per share, bringing the total dividend to $0.61 per share, almost double that of $0.32 in 2022. HSBC also said it will begin a share buyback of up to $2.0 billion, which it expects to complete by the announcement of its first quarter results.
‘Our record profit performance in 2023 enabled us to reward our shareholders with our highest full-year dividend since 2008, three share buy-backs last year totalling $7 billion, and a further share buy-back of up to $2 billion. This reflected four years of hard work and the strength of our balance sheet in a higher interest rate environment,’ said Chief Executive Officer Noel Quinn.
For 2023, the bank’s common equity tier 1 capital ratio improved to 14.8% from 14.2% in 2022, thanks to higher capital generation, which was partially offset by dividends and share buybacks. Return on tangible equity was 14.6%, compared to 10.0% in 2022. Excluding strategic acquisitions and the BoCom impairment, RoTE improved to 15.6% from 11.3%.
Looking ahead, HSBC said it continues to target a return on average tangible equity in the mid-teens for 2024, excluding notable items. It expects banking net interest income of at least $41 billion. While its outlook for loan growth is ‘cautious’ for the first half of the year, it expects customer lending growth in the mid-single digits over the medium to long term.
‘We have a strong platform for growth with the opportunities that exist within our two home markets and across our international wholesale, market-leading transaction banking, and wealth management businesses. We are focused on capturing these growth opportunities, improving our earnings sustainability and targeting mid-teens returns in 2024,’ CEO Quinn continued.
Shares in HSBC dropped 3.2% to HK$60.65 in Hong Kong on Wednesday afternoon.
Copyright 2024 Alliance News Ltd. All Rights Reserved.