HSBC’s profits more than doubled to $21.7 billion
- Bank announces pre-tax earnings of $21.7 billion for the first six months of this year
- This was up from $9.2 billion a year earlier
HSBC’s profits in the first half more than doubled on the back of global rate hikes, with the banking giant planning to reward investors with huge payouts.
The bank posted pre-tax profits of $21.7bn (£16.9bn) for the first six months of this year, up from $9.2bn a year earlier and beating market forecasts of $20. 9 billion.
The group also announced plans to repurchase $2 billion worth of stock and pay a dividend of 10 cents (8 pence) per share.
HSBC, with a market value of $162 billion, posted pre-tax profits of $21.7 billion (£16.9 billion) for the first six months of this year, up from $9.2 billion a year earlier
But while rate hikes in response to high inflation have boosted banks, HSBC warned clients of pain ahead, with further hikes expected globally.
For Britons, this means mortgage rates will continue to rise, adding to cost pressures and skyrocketing food prices hitting households and businesses hard.
The bank said its higher loan loss of $1.3 billion in the first six months, compared to $1.1 billion a year earlier, was due in part to exposure to China’s commercial real estate sector and British commercial banking.
HSBC raised its target for short-term return on tangible equity – the bank’s main earnings measure – to at least the mid-teens for 2023 and 2024, from a previous target of at least 12 percent from 2023. It reported a return on tangible equity of 9.9 percent for 2022
Group CEO Noel Quinn said: “There is still a lot of work to be done, especially given the many challenges in the global economy, but I am confident about the future as we move into the next phase of our strategy and focus on opportunities. to drive value creation, diversify our revenue and maintain tight cost control.’
HSBC Shares rose 2.2 percent on Tuesday morning to 660.8 pence.
Will Howlett, equity research analyst at Quilter Cheviot, commented on the results: ‘HSBC is in a strong position relative to the other major UK banks because it is not as domestically focused.
Banks are being pressured by governments and regulators to pass higher interest rates on to savers, and this means net interest margins are likely to be at their peak for many, even as the Bank of England plans to raise rates again this week.
‘For HSBC, however, it has major operations outside the UK, where the pressure is not as great due to more limited competition. So while the net interest margin has peaked, it may not have fallen as much as its listed peers.”