HSBC's net profit skyrocketed to $18.1 billion for the six months ending June, a substantial leap from the $9 billion reported for the same period in the prior year. The bank's pre-tax profit escalated to $21.7 billion, a 147% rise from $8.78 billion in the first half of 2022. Subsequently, the board of HSBC has declared a second interim dividend of $0.10 per share and announced the planning of a share buyback of up to $2 billion, which they believe will start and end within three months.
HSBC reported a dramatic rise in net profits for the six-month period ending June, jumping from $9 billion in the same period of the prior year to $18.1 billion. In addition, the bank's pre-tax profits surged by 147%, reaching $21.7 billion compared to $8.78 billion during the first half of 2022. This was partially attributed to a $2.1 billion reversal of an impairment fee connected to the sale of its French retail banking operations, as well as a $1.5 billion preliminary gain on the purchase of Silicon Valley Bank UK. The board of directors has approved a second interim dividend of $0.10 per share, as well as an additional buyback of up to $2 billion that is expected to begin soon and be completed within the next three months.
Noel Quinn, HSBC's CEO, informed CNBC's "Capital Connection" that the bank's dividend would potentially exceed its pre-pandemic level this year in the event that everything goes as planned. In 2018, HSBC handed out a dividend amounting to $0.51, high in contrast to the $0.30 distributed in 2019. For the year 2022, the bank has declared two interim dividends of $0.10, thus increasing the total payments to $0.20. Quinn declared that "our final interim dividend at the end of the year, will be the balance to get us to a 50% payout ratio." In March, the British division of the most substantial bank in Europe gained SVB U.K. for £1 ($1.21), excluding the assets and liabilities of its parent company. Revenue boosted by 50% from the beginning of the year, reaching $36.9 billion, which HSBC claims was brought about by rate rises and an increase in net interest income across all its worldwide operations.
Net interest income reached $18.3 billion for the first half, representing an increase of 36% from the same period last year, while the net interest margin climbed 46 basis points to 1.70%.The phenomenal performance was accredited to the expansion of all business lines and products, according to the CEO. "Rates are certainly a factor, but our fee income and trading income have also seen considerable growth."
For the quarter ended in June, HSBC reported pre-tax profit of $8.77 billion, exceeding analysts' estimates of $7.96 billion. Net profit came in at $6.64 billion, compared to the forecast of $6.35 billion, which was a 27% increase from a year ago. Total revenue for the quarter was $16.71 billion, a 38% surge from the preceding year's $12.1 billion. The bank's Hong Kong-listed shares subsequently rose 1.23% after the announcement.
Here are other highlights of the bank's financial report card:Net interest income was up to $9.3 billion in the second quarter of this year, compared to $6.9 billion in the equivalent period in the prior year.Net interest margin, a sign of lending profitability, soared by 43 basis points over the same period in 2023 to 1.72%.Further, HSBC has raised a key performance target, forecasting a return on tangible equity of 12% in the near term, compared to its prior figure of 9.9%.Moreover, Quinn has highlighted that HSBC is looking to generate a "mid-teens" return on tangible equity in the next two years, saying “this is a broad-based delivery of profit and return.”He has also pointed to corporate banking, international wealth management, and international retail banking for the affluent as sources of potential growth.“We're investing in areas that will drive growth beyond the interest rate regime there exists today. My job is to diversify the revenue. And I believe we're starting to show evidence of that and we will continue to invest for diversification of revenue.”Correction: This story has been amended to reflect that net interest margin rose 43 basis points in the second quarter of 2023. An earlier version misconstrued the year.
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