Branch closures likely to continue this year…
Banking giant HSBC reported a significant increase in pre-tax profit in the final quarter of 2022, citing strong reported revenue growth and lower reported operating expenses.
Profit before tax in Q4 2022 was $5.2 billion (£4.3 billion), up by over 90% or $2.5 billion (£2.07 billion) from the same period of the previous year.
Reported revenue during October to December 2022 was up by 24% to $14.9 billion (£12.33 billion), due to strong growth in net interest income and an increase in revenue from markets and securities services.
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For the entire year, the bank’s reported revenue also increased by 4% to $51.7 billion (£42.77 billion). However, profit before tax fell by $1.4 billion (£1.16 billion) to $17.5 billion (£14.48 billion) in 2022.
The British multinational bank indicated a continued refocus towards Asia, and the key industrial and commercial regions of China, in particular. HSBC is also in the process of selling its French and Canadian operations.
In its published annual report, HSBC said it expects to achieve its target of earning a 12% return on equity from this year onwards with an improving global outlook.
“2022 was another good year for HSBC,” Noel Quinn (pictured), group chief executive at HSBC, remarked. “We completed the first phase of our transformation, and our international connectivity is now underpinned by good, broad-based profit generation around the world. This contributed to a strong overall financial performance.
“We are on track to deliver higher returns in 2023 and have built a platform for further value creation. With the delivery of higher returns, we will have increased distribution capacity, and we will also consider a special dividend once the sale of HSBC Canada is completed.”
Steve Clayton, head of equity funds at Hargreaves Lansdown, commented that the numbers themselves are strong compared to market expectations, but the market was hoping for a little more good news in the outlook statement.
“The business is performing well, but much depends on the group maintaining robust cost controls,” Clayton added. “That means more branch closures in the UK this year, with another 130 set to close.
“But for shareholders, that intention to pay out half of earnings suggests an ongoing yield from HSBC shares of perhaps as much as 7% this year and next. HSBC represents one of the most direct routes of investing into the reopening of the Chinese economy. While that remains on track, we would expect to see continuing encouraging trading news coming from the bank.”
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