HSBC full-year profit jumps 78% thanks to record high gain on interest rates

HSBC has reported a 78% jump in full-year pre-tax profit, resulting in a record-high gain on high interest rates.

It did, however, miss forecasts due to a three billion dollar (£2.3 billion) impairment from its stake in a Chinese bank, the Bank of Communications.

The London-headquartered bank, with a market value of 160 billion dollars (£126.6 billion), reported a total pre-tax profit of 30.3 billion dollars (£24 billion) for 2023.

The year prior, the bank reported 17.5 billion dollars (£13.8 billion) for 2022.

HSBC Group chief executive Noel Quinn said: “Our record profit performance in 2023 enabled us to reward our shareholders with our highest full-year dividend since 2008, three share buy-backs last year totalling seven billion (£5.5 billion) and a further share buy-back of up to two billion dollars (£1.5 billion).

“This reflected four years of hard work and the strength of our balance sheet in a higher interest rate environment.

Mr Quinn added: “We have a strong platform for growth with the opportunities that exist within our two home markets and across our international wholesale, market-leading transaction banking, and wealth management businesses.

“We are focused on capturing these growth opportunities, improving our earnings sustainability and targeting mid-teens returns in 2024.”

Expected credit losses and other credit impairment charges came in at 3.4 billion dollars (£2.6 billion) for 2023.

The net charge in 2023 primarily comprised of stage three charges, which were mostly related to exposures in the mainland China commercial real estate.

It also reflected continued economic uncertainty, rising interest rates and inflationary pressures.

Expected credit losses were 33 basis points of average gross loans, including a three basis point reduction due to the inclusion of loans and advances classified as held for sale.

Customer bank accounts also experienced a rise in value, coming in at 41 billion dollars (£32.4 billion) on a reported basis, and 13 billion dollars (£10.2 billion) on a constant currency basis.

Operating expenses also fell by 2% to 32.1 billion dollars (£25.4 billion).