HSBC, the largest bank in Europe, has reported a significant increase in its pre-tax profits, which surged by nearly 80% to reach $30.3bn (£24bn) in 2023, driven by elevated interest rates.
This rise in profits occurs in the context of global central banks hiking interest rates over the past 18 months to combat inflation.
Just last week, NatWest, another major bank, announced its highest annual profit since the 2007 financial crisis.
However, HSBC’s profits fell short of expectations due to a slowdown in China’s economy.
Additionally, the bank’s financial results were impacted by a substantial $3bn charge related to its investment in the Bank of Communications in China.
Predominantly, HSBC garners the majority of its profits from Asia, with a significant focus on China and Hong Kong.
Despite predictions from analysts for a jump to $34.1bn, HSBC’s pre-tax profit in 2022 was $17.1bn. Nevertheless, Noel Quinn, HSBC’s CEO, highlighted the bank’s record profitability in 2023, stating, “Our record profit performance in 2023 enabled us to reward our shareholders with our highest full-year dividend since 2008.”
HSBC announced a new $2bn share buyback program, adding to the three share buybacks totaling $7bn last year. According to Mr. Quinn, the bank returned $19bn to its shareholders in the previous year.
The bank’s financial exposure to the troubled property sector in China, particularly after the 2020 crisis, remains a focal point for investors.
With China, the globe’s second-largest economy, experiencing deflation, consumer spending is likely to be hampered as prices are expected to decrease further in the future.
A significant development occurred last month when a Hong Kong court ordered the liquidation of the heavily indebted property developer Evergrande.
Standard Chartered, another bank with a significant presence in Asia, is set to release its financial results later this week.
