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- By Mariko Oi
- business reporter
Image source, fake images
The bank makes most of its profits in Asia, especially China and Hong Kong
Europe’s largest bank, HSBC, has reported a nearly 80% rise in pre-tax profit to $30.3bn (£24bn) in 2023, boosted by high interest rates.
It comes after central banks around the world raised interest rates over the past 18 months to help curb rising prices.
But a slowdown in China’s economy has meant HSBC’s profits have not been as high as expected.
Its results were also hit by a hefty $3 billion charge for its stake in China Bank of Communications.
The bank makes most of its profits in Asia, especially China and Hong Kong.
HSBC’s pretax profit for 2022 was $17.1 billion and analysts expected it to rise to $34.1 billion last year.
But its chief executive, Noel Quinn, said in a sentence: “Our record earnings performance in 2023 allowed us to reward our shareholders with our highest annual dividend since 2008.”
“They’ve had quite a considerable increase in what we call net interest margin, which is the difference between the amount they charge borrowers and the amount they pay depositors,” banking analyst Frances Coppola told the BBC.
“That’s really been the main driver of growth in both revenue and profit,” he added.
“But we must note that the high interest rate environment is coming to an end.”
The London-based lender rewarded investors with a new share buyback worth $2 billion.
In addition to three share buybacks totaling $7 billion, Quinn said the bank returned $19 billion to shareholders last year.
Investors have also been closely monitoring HSBC’s exposure to China’s real estate sector, which has been mired in crisis since 2020.
China, the world’s second-largest economy, is experiencing falling prices, known as deflation, which tends to deter consumers from spending as they expect items to become cheaper in the future.
“China’s economy simply cannot get going,” Moody’s economist Harry Murphy Cruise had previously told the BBC. “Investors are crying out for greater economic support.”
Rival Asia-focused bank Standard Chartered will report its financial results later this week.