Quarterly HSBC profit after tax has surged by 235%. The bank reached $6.26 billion in after-tax earnings in September, compared to $2.66 billion a year earlier.
The largest bank in Europe by assets recorded a $4.5 billion increase in its quarterly profit before tax. The pre-tax earnings reached $7.7 billion. This boost was primarily attributed to a more favorable interest rate environment.
Economists’ predictions for the third quarter expected a profit after tax of $6.42 billion and a profit before tax of $8.1 billion, both of which were not met.
The increased HSBC profit was, in part, a result of a $2.3 billion impairment incurred during the third quarter of 2022, associated with the planned divestment of its retail banking operations in France.
HSBC profit surges due to favorable interest rates
In the first quarter of 2023, $2.1 billion was restored as the completion of the transaction in question became less certain.
In the first quarter of 2023, $2.1 billion was restored as the completion of the transaction in question became less certain.
In the third quarter, revenue increased to $7.71 billion from $3.23 billion a year ago. The credit of this HSBC profit goes to the growth of the favorable interest rate environment.
HSBC linked the boost in revenue to the improved interest rate climate, which it stated had bolstered net interest income across all its global businesses.
The net interest margin, a gauge of lending profitability, increased to 1.7%, surpassing the estimated 1.68%, and rose by 19 basis points compared to the previous year.
NIM decline and profit surge
One of the significant findings of this report by HSBC was a modest decrease of two basis points in the Net Interest Margin (NIM) compared to the preceding quarter.
This shift was primarily influenced by a prevailing trend among the bank’s customers, particularly in Asia.
The customers opted to transfer their deposits into term products, reflecting evolving consumer preferences in the region.
Looking at the broader financial picture, A remarkable HSBC profit after tax was reported, of $24.33 billion in the first nine months of 2023.
This figure marked a substantial increase when contrasted with the $11.59 billion earned during the corresponding period in 2022. This kind of performance notably demonstrates the bank’s resilience and growth over the past year.
In response to these impressive financial results, HSBC’s Hong Kong-listed shares experienced a 0.43% increase. The growth signals positive market sentiment and investor confidence in the bank’s future outlook.
The increment in share value reflects the market’s endorsement of the bank’s performance and its strategic decisions.
Furthermore, as a direct response to its strong financial performance, HSBC’s board approved a third interim dividend of 10 cents per share.
This dividend announcement reflects the bank’s commitment to rewarding its shareholders and distributing its profits.
HSBC’s $3 Billion Share Buy-Back Program and Shareholder rewards
In a strategic move, HSBC aimed at further enhancing shareholder value and optimizing its capital structure. The bank also unveiled plans to launch a substantial share buy-back program.
This program is set to amount to $3 billion and is expected to commence shortly, with a planned conclusion by the time of the bank’s full-year results disclosure on February 21, 2024.
This buy-back initiative signifies HSBC’s commitment to efficiently deploying its capital and returning value to its shareholders.
HSBC group CEO Noel Quinn expressed satisfaction in providing shareholder rewards. He quoted the announcement of three 2023 share buybacks, amounting to $7 billion, and three quarterly dividends totaling $0.30 per share.
Noel Quinn emphasized the bank’s substantial distribution capacity, stating the ability to reward shareholders while maintaining investment in growth initiatives.
HSBC’s buyback plan to lower the CET1 ratio, targets a 14-14.5% range
The CET1 ratio, a metric gauging financial resilience in European banks, will be impacted by a 0.4 percentage point decrease due to the buyback done after a remarkable HSBC profit.
HSBC intends to lower its CET1 ratio from the present 14.9% to a range of 14% to 14.5% in the future.
The bank disclosed a dividend payout ratio of 50% for 2023 and 2024, excluding significant exceptional items.
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