HSBC Holdings has recently increased its key profitability target and unveiled a fresh $2 billion share buyback
As it reported a substantial rise in income for the first half of the year
benefitting from increasing central bank interest rates worldwide.
The bank raised its near-term return on tangible equity goal for 2023 and 2024 to at least the mid-teens
up from the previous target of at least 12% from 2023 onwards. It had a return on tangible equity of 9.9% for 2022.
HSBC raises its near-term return on tangible equity goal
HSBC’s performance at its investment bank was comparatively modest, with income rising 16%. In contrast, the commercial banking and wealth divisions recorded near-40% gains
Reflecting the impact of rising interest rates globally, which have bolstered lending income while investment banking revenues
It has been suppressed due to a global deal drought and volatile markets.
The bank revised its forecast for net interest income this year to be above $35 billion
An increase from the previous estimate of $34 billion.
First-half profit surges more than two-fold
In the first six months of the year, HSBC posted a pretax profit of $21.7 billion
A significant improvement from $9.2 billion in the same period last year and beating analysts’ average forecast of $20.9 billion. It also declared an interim dividend of 10 cents per share.
Despite the impressive profits, HSBC cautioned that many customers might face difficulties in the uncertain economic outlook, particularly in the UK, where rising inflation and interest rates are putting pressure on households.
While the bank has reported higher credit losses in the first half, partly due to its exposure to the Chinese commercial real estate sector and UK commercial banking, it is also considering exiting a dozen countries to boost profits and streamline its global operations.
HSBC’s Hong Kong shares hit 4-year high
HSBC is actively pursuing its investment in China, securing a first-of-its-kind fund distribution license as a foreign firm in the country, reaffirming its commitment to the Chinese wealth market. The bank is focusing on expanding beyond traditional high-net-worth customers to cover the emerging affluent locally.
HSBC’s shares surged following the positive earnings report, with shares in Hong Kong reaching their highest level since May 2019 and shares in London rising 2% in early trading. The bank is continuing with its strategy to strengthen its foothold in strategic markets while making necessary adjustments to improve its financial performance.
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