HSBC, Europe’s largest bank by assets, reported a full-year 2023 pretax profit of $30.3 billion, marking a 78% increase from the previous year. However, this figure fell short of analysts’ median estimates of $34.06 billion, causing the bank’s London-listed shares to plummet by as much as 7%.
Chief Executive Noel Quinn announced an additional share buyback of up to $2 billion, aiming to complete it before the bank’s next quarterly earnings report. Additionally, HSBC plans to consider offering a special dividend of 21 cents per share in the first half of 2024 following the sale of its Canada business.
Despite missing estimates, HSBC returned $19 billion to shareholders in 2023, with the highest full-year dividend per share since 2008 and three share buybacks totaling $7 billion.
Quinn’s remuneration doubled to $10.6 million in 2023, partly due to variable long-term incentives since his appointment in 2020.
However, HSBC faced challenges, including a $3 billion valuation adjustment on its 19% stake in China’s Bank of Communications, leading to an 80% decline in fourth-quarter pretax profit compared to the previous year.
HSBC’s Hong Kong shares dropped by as much as 5% after trading resumed, while London-listed shares fell by around 7% in early trading, marking the largest one-day drop since 2020.
Highlights from HSBC’s full-year 2023 financial report include:
– Revenue increased by 30% to $66.1 billion.
– Net interest margin rose to 1.66% from 1.48% in 2022.
– Common equity tier 1 ratio stood at 14.8%.
– Basic earnings per share was $1.15.
– Dividend per ordinary share was 61 cents, the highest since 2008.
Looking ahead to 2024, HSBC is focusing on the fastest-growing parts of Asia and aims to achieve a mid-teens return on tangible equity. The bank plans to expand non-interest income revenue sources through its wealth and transaction banking business, targeting banking non-interest income of at least $41 billion in financial year 2024.
HSBC remains cautious about the loan growth outlook for the first half of 2024 amid economic uncertainty, expecting mid-single-digit annual percentage growth over the medium to long term.
