HSBC’s net profit down 2% to $17.7b in H1; dividend is $0.10

Gains from the sale of its Canada and France businesses were offset by impairments.

HSBC has earned $17.7b profit after tax in the first six months of 2024, 2% lower than in H1 2023, the bank’s latest interim results showed.

Profit before tax was $21.6b in H1, “stable” compared with H1 2023. Revenue for the period inched up 1% to $37.3b compared to a year earlier, including gains and losses on impairments and banking business sales.

In H1, HSBC completed the disposal of its banking business in Canada, resulting in a $4.8b gain. 

However, the bank also had to recognize an impairment of $1.2b after it classified its Argentina business for sale; as well as the impact of $2.1b reversal of an impairment following the sale of its French retail banking operations.

HSBC also logged a $1.5b gain on its acquisition of Silicon Valley Bank UK.

The bank’s board approved a second interim dividend of $0.10 per share. HSBC also announced plans to initiate a share buyback of up to $3b, which it expects to be completed between August to November.

HSBC expects to log a banking net interest income (NII) of $43b in 2024, whilst loan growth will hover at single digits.

Incumbent group chief executive Noel Quinn expressed confidence that HSBC has the right strategy and model to grow its revenue, and said that HSBC has adjusted to mid-teens its target returns on tangible equity in 2025.

“Our investment in Wealth is delivering higher, more diversified revenue and we continue to grow our core international and scale businesses, all of which helped us to provide $13.7b of distributions in respect of the first half,” Quinn said in his last interim results presentation before stepping down as group chief executive of HSBC on 2 September.

NIM down, expenses rise
HSBC’s net interest margin decreased 8 basis points (bps) to 1.62 in H1 compared to the same period in2023. This reflects a rise in the funding cost of average interest-bearing liabilities, the bank said in a press release.

Operating expenses are 5% higher, at $16.3b for H1. This was due to higher technology spend and investment, inflationary pressures, and an increase in the performance related pay accrual.

Customer lending balance is $938b for the period, $12b higher on a constant currency basis compared with 31 December 2023.

Common equity tier 1 (CET 1) capital ratio is 15%, 0.2 percentage points higher than in Q4 2023.

Lower revenue in Q2
In the second quarter, HSBC reported a revenue of $16.5b, lower by $0.2b compared to Q2 2023. This is a result of its divestment of its France and Canada businesses in Q1.

The quarter also saw loss related to the recycling of reserves following the completion of the sale of HSBC’s Russia business, the bank said.

Profit before tax is $0.1b higher at $8.9b for Q2.

Operating expenses were 3% higher at $8.1b for Q2 compared to Q2 2023. Higher technology costs and investments drove up expenses, partly offset by reductions following the Canada and France business sales.