HSBC profits more than double to $21.7bn

HSBC’s first-half profits more than doubled, thanks to global interest rate hikes, with the banking giant planning to reward investors with bumper payouts.

The bank posted a pre-tax profit of $21.7billion (£16.9 billion) for the first six months this year, up from $9.2billion a year earlier and beating market forecasts of $20.9biillion.

The group also revealed plans to buyback up to $2billion worth of shares and a dividend of 10 cents (8p) per share. 

The bank posted a pre-tax profit of $21.7billion (£16.9 billion) for the first six months this year, up from $9.2billion a year earlier and beating market forecasts of $20.9biillion

But, while rate hikes in response to high inflation have boosted banks, HSBC warned customers of pain to come, with further hikes expected globally. 

For Britons this means mortgage rates continuing to climb, adding to cost pressures and sky-high food prices that are hitting households and businesses hard. 

The bank said its higher credit loss of $1.3billion in the first six months, compared  to $1.1billion a year earlier, resulted partly from exposure to the China commercial real estate sector and UK commercial banking. 

HSBC increased its near-term return on tangible equity goal – the bank’s key measure of profit – to at least mid-teens for 2023 and 2024, from a previous target of at least 12 per cent from 2023 onwards. It reported return on tangible equity of 9.9 per cent for 2022

Noel Quinn, group chief executive, said: ‘There is still much work to do, especially given the many challenges in the global economy, but I am confident about the future as we move further into the next phase of our strategy and focus on opportunities to drive value creation, diversify our revenue and retain tight cost control.’

HSBC shares were up 2.2 per cent to 660.8p on Tuesday morning.   

Commenting on the results, equity research analyst at Quilter Cheviot Will Howlett said: ‘HSBC is in a strong position compared to the other large UK banks as it isn’t quite so domestically focused. 

‘Banks are beginning to be squeezed by governments and regulators to pass on higher interest rates to depositors, and this means net interest margins for many have likely peaked, even with the Bank of England set to raise rates again this week. 

‘For HSBC, however, it has large operations outside the UK, where the pressure isn’t so great due to more limited competition. So while the net interest margin will have peaked, it won’t have to fall quite so much as its listed peers.’