HSBC Q3 Results: Profit Surges On Higher Interest Rate, Launches $3B Stock Buyback, Targets Special Dividend

HSBC Holdings PLC HSBC reported Q3 2023 revenues increased 40% Y/Y (reported and constant currency) to $16.2 billion on a rise in net interest income (NII).

NII increased 15% Y/Y to $9.2 billion, aided by higher yields on the asset book (mainly in the U.K. and main legal entities in Asia), with net interest margin (NIM) expanding 19bps Y/Y to 1.70%. 

Operating expenses rose 2% Y/Y to $8.0 billion due to higher technology costs, higher inflation, and increased performance-related pay accrual.

Profit before tax rose significantly to $7.7 billion for Q3 (vs. analysts' average forecast of $8.1 billion, as per Reuters) from $3.2 billion a year earlier, reflecting the positive impact of a higher interest rate environment. 

EPS rose to $0.29 in Q3 from $0.10 in the prior-year quarter. 

As of September 30, 2023, loans and advances to customers stood at $935.8 billion.

HSBC reported expected credit losses and other credit impairment charges of $1.1 billion (flat Y/Y). 

Common equity tier 1 capital ratio stood at 14.9% in Q3 2023.

Repurchase: The bank further initiated a share buy-back of up to $3 billion, expected to start shortly and complete by FY23 results announcement on February 21, 2024.

"Our Wealth business also gained further traction, attracting $34bn of net new invested assets in the quarter and growing wealth balances by 12% compared with last year," said Noel Quinn, CEO.

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Outlook: HSBC reiterated its outlook for 2023 NII at above $35 billion and RoTE in the mid-teens for 2023 and 2024.

HSBC reaffirms its target of paying a special dividend per share of $0.21 from completing the Canadian Banking unit sale in H1 2024. HSBC announced the third interim dividend of $0.10 per share. The dividend of $0.50 per ADS will be payable by the depositary in U.S. dollars.

Also Read: HSBC To Buy Citigroup's China Consumer Wealth Management Business

Price Action: HSBC shares are trading higher by 0.16% at $36.77 premarket on the last check Monday.