HSBC H1 Profit Rockets, Raises NII Outlook, Plans Another $2B Buyback

HSBC Holdings PLC HSBC H1 2023 revenues increased to $36.9 billion from $24.5 billion a year ago.

Revenues benefited from higher net interest income (NII) across global businesses on the increased interest rates and gains related to the transactions in France and the U.K. 

Net interest margin expanded by 46 basis points to 1.70%.

As of June 30, 2023, loans and advances to banks stood at $959.6 billion.

Operating expenses declined 4% Y/Y to $15.5 billion, mainly due to lower restructuring and other related costs (following the completion of the cost-saving program at the end of 2022 and the impact of a historical asset impairments reversal). 

Profit before tax rose significantly to $21.7 billion for H1 (vs. analysts' average forecast of $20.9 billion, as per Reuters) from $8.8 billion a year earlier, with an impairment charge reversal of $2.1 billion related to the planned sale of its French operation and a provisional gain of $1.5 billion from SVB UK acquisition.

EPS rose to $0.86 in H1 from $0.40 in the prior-year quarter. 

HSBC reported expected credit losses and other credit impairment charges of $1.3 billion (up $0.3 billion Y/Y). 

Common equity tier 1 capital ratio stood at 14.7% in H1 2023.

Dividend & Repurchase: HSBC announced the second interim dividend of $0.10 per share. 

Repurchase: The bank declared a further share buyback of up to $2 billion, expected to start shortly and finish within three months.

Outlook: HSBC raised its outlook for 2023 NII to above $35 billion (vs. at least $34 billion earlier) and now expects RoTE in the mid-teens for 2023 and 2024 (vs. at least 12% for 2023 onwards).

HSBC reiterated its guidance for operating expense growth of approximately 3% for 2023.

Also Read: HSBC Expands Green Finance and Bond Teams in China Amid Geopolitical Uncertainties

Price Action: HSBC shares are trading higher by 1.01% at $42.20 premarket on the last check Tuesday.