HSBC’s records $12.9b pre-tax profit for H1

This is $12.9b higher compared to the first six months of 2022.

Group chief executive Noel Quinn expressed confidence in achieving the bank's revised mid-teens return on tangible equity target in 2023 and 2024. 

Revenue rose to $36.9b, $12.3b higher than a year ago, which HSBC attributed to higher interest income across all its global businesses. Net interest margin (NIM) is 1.7%, 46 basis points higher.

Group chief executive Noel Quinn expressed confidence in achieving the bank's revised mid-teens return on tangible equity target in 2023 and 2024. 

“There was good broad-based profit generation around the world, higher revenue in our global businesses driven by strong net interest income, and continued tight cost control,” Quinn noted.

A second interim dividend of $0.1 per share has been announced. HSBS also plans a second share buy-back in 2023 of up to $2b, and the bank expects substantial further distribution capacity ahead. 
“There is still much work to do, especially given the many challenges in the global economy, but I am confident about the future as we move further into the next phase of our strategy and focus on opportunities to drive value creation, diversify our revenue and retain tight cost control,” Quinn said.

Operating expenses were 4% lower at $15.5b, thanks to lower restructuring and related costs following the completion of HSBC’s cost-saving programme at end-2022. HSBC also reported approximately $200b impact from a reversal of historical asset impairments.

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Expected credit losses and other credit impairment charges (ECL) is $1.3b, which HSBC said reflected a “more setable outlook in most markets” although the bank cautioned that inflationary pressures remained. The charges include $300m relating to the commercial real estate sector in mainland China and charges in commercial banking (CMB) in the UK.

Customer accounts increased by $25b. On a constant currency basis, customer accounts increased by $3b, which the bank attributed to the reclassification of balances associated with our retail banking operations in France from held for sale during the period. 

HSBC added that its acquisition of Silicon Valley Bank UK resulted in a growth of $7b. Its reclassification of its Oman business as held for sale resulted in a $5b reduction. 

Excluding these factors, however, deposits fell– reflecting reductions in wealth and personal banking (WPB) and CMB in HSBC UK, as well as in global banking markets (GBM).

Common equity tier 1 (CET1) capital ratio is 14.7%, a by 0.5 percentage point (ppt) rise compared to end-Q4 2022, driven by capital generation net of the dividend accrual, and included an approximately 0.3 ppt.