3Q23 EARNINGS RELEASE.
Noel Quinn, Group Chief Executive, said:
"We have had three consecutive quarters of strong financial performance and are on track to achieve our mid-teens return on tangible equity
target for 2023. There was good broad-based growth across all businesses and geographies, supported by the interest rate environment. Our
Wealth business also gained further traction, attracting $34bn of net new invested assets in the quarter and growing wealth balances by 12%
compared with last year. We are pleased to again reward our shareholders. We have now announced three share buy-backs in 2023 totalling up
to $7bn, as well as three quarterly dividends which total $0.30 per share. This underlines the substantial distribution capacity that we have, even
as we continue to invest in growth."
Financial performance (3Q23 vs. 3Q22)
– Profit before tax rose by $4.5bn to $7.7bn, reflecting the positive impact of a higher interest rate environment. The increase was in
part due to a $2.3bn impairment in 3Q22 relating to the planned sale of our retail banking operations in France, of which $2.1bn was reversed
in 1Q23 as the completion of the transaction became less certain. We now expect to reclassify these operations to held for sale in 4Q23, at
which point the impairment would be reinstated. On a constant currency basis, profit before tax increased by $4.6bn to $7.7bn.
Reported profit after tax increased by $3.6bn to $6.3bn.
– Revenue increased by $4.7bn or 40% to $16.2bn, as the higher interest rate environment supported growth in net interest income in all of
our global businesses, and non-interest income increased. On a constant currency basis, revenue rose by 40% to $16.2bn.
– Non-interest income increased by $3.4bn or 97% to $6.9bn, primarily due to the non-recurrence of the impairment relating to the sale of
our retail banking operations in France referred to above. The increase also included a rise in the revenue offset driven by higher central costs
of funding Global Banking and Markets (‘GBM’) trading activity. These increases were partly offset by disposal losses of $0.6bn relating to
repositioning and risk management activities in our hold-to-collect-and-sell portfolio in certain key legal entities. On a constant currency
basis, non-interest income rose by 93% to $6.9bn.
– Net interest margin (‘NIM’) of 1.70% increased by 19 basis points (‘bps‘) compared with 3Q22, and decreased by 2bps compared with
2Q23, notably reflecting an increase in customers migrating their deposits to term products, particularly in Asia.
– Expected credit losses and other credit impairment charges (‘ECL‘) of $1.1bn were broadly in line with 3Q22. The 3Q23 charge
primarily comprised stage 3 charges, including $0.5bn relating to the commercial real estate sector in mainland China.
– Operating expenses of $8.0bn were $0.2bn or 2% higher than in 3Q22. The growth was primarily due to higher technology costs, the
impacts of rising inflation and an increase in the performance-related pay accrual. These increases were partly offset by lower restructuring
and other related costs following the completion of our cost-saving programme at the end of 2022.
– Customer lending balances decreased by $24bn compared with 2Q23. On a constant currency basis, lending balances decreased by
$5bn, reflecting a reduction in Commercial Banking (‘CMB‘) as demand in Asia remained muted, although mortgage balances in Wealth and
Personal Banking (‘WPB‘) were higher, notably in Asia and the UK.
– Customer accounts decreased by $33bn compared with 2Q23. On a constant currency basis, customer accounts were stable.
– Common equity tier 1 (‘CET1’) capital ratio of 14.9% increased by 0.2 percentage points compared with 2Q23, driven by capital
generation and lower risk-weighted assets (‘RWAs‘), partly offset by the dividend accrual and the share buy-back announced at 2Q23.
– The Board has approved a third interim dividend of $0.10 per share. We also intend to initiate a further share buy-back of up to $3bn,
which we expect to commence shortly and complete by our 2023 full-year results announcement on 21 February 2024. This is expected to
have a 0.4 percentage point impact on our CET1 capital ratio.
And later;
Third interim dividend for 2023
On 30 October 2023, the Directors approved a third interim dividend in respect of the financial year ended 31 December 2023 of $0.10 per
ordinary share, a distribution of approximately $1.946bn. The dividend will be payable on 21 December 2023 to holders of record on the Principal
Register in the UK, the Hong Kong Overseas Branch Register or the Bermuda Overseas Branch Register on 10 November 2023.
The dividend will be payable in US dollars, or in pounds sterling or Hong Kong dollars at the forward exchange rates quoted by HSBC Bank plc in
London at or about 11.00am on 11 December 2023. The ordinary shares in London, Hong Kong and Bermuda, and American Depositary Shares
(‘ADSs’) in New York will be quoted ex-dividend on 9 November 2023.
Item downloadable via here;
https://www.hsbc.com/investors/results- ... #downloadsA RNS will be issued no doubt at 0700hrs today in UK.
Ian (I hold).