The Hong Kong/London-listed banking group has become the latest in a series of financial institutions to report results. Wealth banks and retail pre-tax profit declined during the six months.
HSBC’s wealth and personal banking arm – which includes its private banking arm – posted adjusted pre-tax profit of $2.946 billion in the six months to June 2022, compared with $3.751 billion a year earlier.
Operating costs for this business division were $7.411 billion, compared to $7.277 billion a year ago; Net operating income was $10.349 billion, down from $11.018 billion, HSBC said in a statement yesterday.
HSBC reported profit for the six months to the end of June 2022, attributable to shareholders, of $8.289 billion, compared with $7.276 billion a year ago. The banking group’s cost-effectiveness ratio narrowed to 65.1% from 66.9% a year earlier. Reported pretax profit, meanwhile, fell $1.7 billion to $9.2 billion, reflecting a net charge for expected credit losses and other credit impairment charges. , compared to a net release a year ago. Overall bank results have oscillated in recent years due to the pandemic, with banks setting aside money to cover expected credit write-downs, then releasing that money when lockdowns end, and vice versa.
The bank’s shares rose more than 8% around 1.30pm UK time to around 555 pence per share. The bank’s decision to return to quarterly dividends has encouraged investors, analysts said.
“We expect investors to welcome the bank’s decision to revert to quarterly dividends next year and return to pre-Covid payout levels as soon as possible. It’s this kind of announcement that can give a big boost to a company’s stock price,” said Mark Crouch, analyst at social investment network eToro.
Reported after-tax profit rose $800 million to $9.2 billion; this figure included a $1.8 billion gain on the recognition of a deferred tax asset on historical losses, due to improved profit forecasts for the UK tax group, which accelerated the use expected from those losses, HSBC said. Reported operating expenses decreased 4%, primarily due to the impact of currency fluctuations. On an adjusted basis, costs decreased by 1%.
The banking group said its Common Equity Tier 1 ratio, an international standard measure of capital buffer, was 13.6% at the end of June.
“The progress we have made in growing and transforming HSBC means we are in a strong position as we enter the current rate cycle,” said Noel Quinn, chief executive of HSBC. “We are confident of achieving a return on tangible equity of at least 12% from 2023, which would represent our best returns in a decade.”
“As a result, we are providing more specific guidance on the dividend payout ratio of approximately 50% for 2023 and 2024. We understand and appreciate the importance of dividends for all of our shareholders. We will strive to restore the dividend to pre-Covid-19 levels as soon as possible. We also intend to return to quarterly dividends in 2023,” Quinn said.
The directors of HSBC have approved an interim dividend for the half year 2022 of $0.09 per ordinary share in respect of the year ended December 31, 2022.
As previously announced, the Hong Kong/London-listed banking group said that over the past year and into 2022 it has accelerated restructuring, sold retail banking operations in France and branches in Greece, as well as exiting domestic mass market retail banking in the United States. . Planned sales in France and Greece are expected to end in 2023, and the US release is complete. It has also reached an agreement to sell its retail business in Russia.
(An earlier version of this article appeared yesterday on