In 2023, HSBC Holds A Historic Annual Pre-Tax Profit Due To Increased Global Interest Rates

In 2023, HSBC Holdings achieved a historic annual pre-tax profit due to increased global interest rates, despite experiencing a $3 billion loss on its investment in China’s Bank of Communications. The multinational bank announced a pre-tax profit of $30.3 billion for the year, marking a 77.2% increase compared to the previous year, largely driven by revenue expansion.

This encompassed the divestment of its retail banking activities in France, finalized on Jan 1, 2024, and increased net interest income (NII) by the heightened interest rates globally, as stated by Noel Quinn, HSBC Group CEO. Revenue surged to $66.1 billion, marking a 30% year-on-year increase, driven by a $5.4 billion growth in NII, supported by expansions in all of its worldwide business segments due to the interest rate landscape.

The customer lending balances increased by $15 billion when reported, but decreased by $3 billion when adjusted for constant currency. Furthermore, HSBC’s board has authorized a fourth interim dividend of $0.31 per share, bringing the total for 2023 to $0.61 per share. Additionally, a buy-back of up to $2 billion has been approved, expected to be completed by the first quarter of 2024, following last year’s announcement of three buy-backs totaling $7 billion.

Although HSBC intends to exercise caution in expanding its loans in the first half of 2024, it anticipates a mid-single-digit percentage growth in customer lending on a year-on-year basis over the medium to long term. Due to ongoing economic uncertainty, the bank foresees ECL charges to amount to approximately 40 basis points of average gross loans in 2024. HSBC projects that ECL charges will eventually stabilize within a range of 30-40 basis points of average loans over the medium to long term.


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