Why HSBC Shares Are Diving Premarket Wednesday

HSBC Holdings PLC HSBC shares are trading lower after it reported fourth-quarter and 2023 results.

Fourth-quarter revenue declined 11% Y/Y to $13.021 billion as NII fell 7% Y/Y to $8.28 billion, impacted by notable items of $(2.7) billion booked in the quarter. Net interest margin (NIM) contracted to 1.52% from 1.68% a prior-year quarter.

Revenue rose over 30% Y/Y to $66.1 billion in FY23, including growth in NII of $5.4 billion. In FY23, operating expenses fell 2% Y/Y to $32.1 billion due to lower restructuring and other related costs of $3.0 billion following the completion of its cost-to-achieve program that was completed in 2022.

Profit before tax rose significantly to $30.3 billion for FY23 (vs. analysts’ forecast of $34.1 billion, per Reuters) from $17.1 billion a year earlier, reflecting higher revenue. 

In the quarter, profit before tax declined to $1.0 billion from $5.0 billion a year ago, which included a $3.0 billion charge from its stake in China’s Bank of Communications following the reassessment of its accounting value-in-use.

EPS (excluding material notable items and related impacts) stood at $1.22 in FY23 and $0.25 in the quarter. 

HSBC reported expected credit losses and other credit impairment charges (ECL) of $3.4 billion in the year, reflecting 33bps of average gross loans. 

As of December 31, 2023, loans and advances to customers stood at $938.5 billion. Common equity tier 1 capital ratio stood at 14.8% in 2023 vs. 14.2% in 2022.

Repurchase: HSBC completed a share buyback totaling $7 billion in 2023. The bank initiated a new share buyback of up to $2.0 billion, which is expected to be completed by the first-quarter FY24 results announcement.

Dividend: The Board approved a fourth interim dividend per share of $0.31, resulting in a total 2023 dividend per share of $0.61.

HSBC reaffirms its target of paying a special dividend per share of $0.21 from completing the Canadian Banking unit sale in H1 2024.

Outlook: HSBC expects NII of at least $41 billion and RoTE in the mid-teens for 2024. HSBC expects to maintain the CET1 capital ratio within its medium-term target range of 14% to 14.5% and cost growth of approximately 5% for 2024.

Also Read: HSBC Hit With £57.4M Penalty For Deposit Protection Breaches

Price Action: HSBC shares are down 7.64% at $37.73 premarket on the last check Wednesday.

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