HSBC: Banking giant reports a 78 per cent jump in full-year pre-tax profit

HSBC Group chief executive Noel Quinn said: “Our record profit performance in 2023 enabled us to reward our shareholders with our highest full-year dividend since 2008, three share buy-backs last year totalling £5.5bn and a further share buy-back of up to £1.5bn.

“This reflected four years of hard work and the strength of our balance sheet in a higher interest rate environment.

Mr Quinn added: “We have a strong platform for growth with the opportunities that exist within our two home markets and across our international wholesale, market-leading transaction banking, and wealth management businesses.

“We are focused on capturing these growth opportunities, improving our earnings sustainability and targeting mid-teens returns in 2024.”

Expected credit losses and other credit impairment charges came in at £2.6bn for 2023.

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The net charge in 2023 primarily comprised of stage three charges, which were mostly related to exposures in the mainland China commercial real estate. It also reflected continued economic uncertainty, rising interest rates and inflationary pressures.

Richard Hunter, Head of Markets at interactive investor, commented: “HSBC has again flexed its financial muscles with a leap in profits, despite an ugly final quarter which was marred by a large impairment relating to its Chinese operations.

He added: "Despite the overall strength of the numbers, the share price reaction overnight highlighted some of the concerns which the group is likely to be facing in the coming months.

"The likely reduction of interest rates globally could remove a plank from a core growth area of late, while the rather messy performance in the fourth quarter could potentially lead to some rather more negative momentum. Indeed, in the group’s own outlook, HSBC is forecasting slow growth for the first half of the year, followed by a gradual recovery, while inevitably the parlous state of the Chinese economy in general and the real estate sector in particular are ominous headwinds.

He added: “Even so, HSBC is managing to shield itself from economic attack through its sheer size, while also remaining mindful on the importance of continuing to grow the business, especially in areas where it has particular strength.

"Among the bank’s immediate strategic objectives are to grow its international businesses while also diversifying its revenues, especially in the likes of its wealth businesses in Asia.

"Apart from the longer term potential for the key Chinese market, the group has also identified areas such as India and Vietnam as being some of the fastest growing economies at present, while the building economic connections between Asia and the Middle East, notwithstanding any geopolitical conflicts, are also emerging opportunities for HSBC with its sprawling footprint.”