HSBC said on Wednesday it had achieved a “record profit” in 2023 as pre-tax earnings soared nearly 80 percent, and the banking giant also announced more share buybacks.
The Asia-focused lender and its peers have been supported by rising interest rates for more than a year, but are bracing for greater economic uncertainties in 2024.
The bank generates most of its revenue in Asia and has spent several years pivoting to the region, vowing to develop its rich business and target fast-growing markets.
Despite strong profits, HSBC noted the effects of China’s slower-than-expected economic recovery following the Covid-19 pandemic as well as heightened geopolitical tensions.
The company reported pretax profits of $30.3 billion, up from $17.1 billion in the previous year, in a statement to the Hong Kong stock exchange.
Profit after tax increased by $8.3 billion, to $24.6 billion.
“Our record profitable performance in 2023 enabled us to reward our shareholders with our highest full-year dividend since 2008,” said chief executive Noel Quinn.
The bank also said Wednesday that it will begin a share buyback of up to $2 billion, following the announcement last year of three share buybacks totaling $7 billion.
“This reflected four years of hard work and the strength of our balance sheet in a higher interest rate environment,” Quinn added.
HSBC said the profits included a “favorable year-on-year impact” of $2.5 billion from the sale of its French commercial banking operations, as well as an interim gain of $1.6 billion recognized on its acquisition of Silicon Valley Bank UK.
The profits were partially offset by an impairment charge related to the investment of its partner, the Bank of Communications of China.
Revenue rose 30 percent to $66.1 billion, HSBC said, citing “increases in all our global businesses due to the higher interest rate.”
Shares in HSBC in Hong Kong were down more than three percent in early afternoon trading on Wednesday.
Quinn said the bank remains “confident in the resilience of the Chinese economy, and the growth opportunities in mainland China in the medium and long term”.
The group’s chairman, Mark Tucker, noted that China’s recovery from reopening has been “sloppier than expected,” and that the world’s second-largest economy’s five percent growth target is expected this year.
HSBC reported expected credit losses of $3.4 billion in 2023, which included charges “primarily related to mainland China commercial real estate.”
China’s real estate market woes have continued to weigh on the country’s economic growth, with the country’s most indebted developer Evergrande recently granted a liquidation order in a Hong Kong court.
HSBC forecast net interest income of at least $41 billion in 2024, while it continued to target a return on average tangible equity in the mid-teens.
“While our loan growth outlook remains cautious for the first half of 2024, we continue to expect year-on-year customer loan interest rate growth in the mid-single digits over the medium to long term,” the bank added.
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Published: 21 Feb 2024, 12:01 IST