HSBC announced on Wednesday that it achieved a “record profit” in 2023, witnessing a significant surge in pre-tax gains by nearly 80 percent. This accomplishment was accompanied by the announcement of further share buybacks by the banking giant. While HSBC and its counterparts have benefited from rising interest rates for over a year, they anticipate greater economic uncertainties in 2024.
The bank, primarily operating in Asia, has strategically shifted its focus to the region over several years, emphasizing the development of its wealth business and targeting fast-growing markets. Despite its impressive profits, HSBC acknowledged the impact of China’s slower-than-expected economic recovery post-Covid-19 pandemic and heightened geopolitical tensions.
In a statement to the Hong Kong stock exchange, the firm reported pre-tax profits of $30.3 billion, marking a substantial increase from $17.1 billion the previous year. Post-tax profit also saw a notable rise of $8.3 billion, reaching $24.6 billion, while revenue surged by 30 percent to $66.1 billion.
CEO Noel Quinn expressed satisfaction with the record profit performance, attributing it to years of diligent work and the robustness of the bank’s balance sheet in a higher interest rate environment. HSBC announced a share buyback of up to $2 billion, in addition to a fourth quarterly dividend of $0.31 per share, totaling $0.61 per share for 2023.
The reported profits included a favorable impact from the sale of its French retail banking operations and a provisional gain recognized on its acquisition of Silicon Valley Bank UK. However, these gains were partially offset by a $3 billion impairment charge related to its holding in China’s Bank of Communications, which significantly impacted HSBC’s fourth-quarter profits.
Despite this setback, HSBC maintains confidence in the resilience and growth opportunities of the Chinese economy over the medium to long term. The bank reported expected credit losses of $3.4 billion in 2023, notably attributed to mainland China commercial real estate exposures.
Looking ahead to 2024, HSBC forecasts a net interest income of at least $41 billion, while aiming for a return on average tangible equity in the mid-teens. Although the outlook for loan growth remains cautious for the first half of 2024, the bank anticipates mid-single digits percentage growth in customer lending over the medium to long term.
