HSBC profit growth and dividend payments
2023.02.21 01:46
HSBC profit growth and dividend payments
By Kristina Sobol
Budrigannews.com – HSBC Holdings PLC logged a significant increase in its fourth-quarter profit on Tuesday as a result of rising interest rates and the announcement of a special dividend on the sale of its Canadian business.
For the three months ending on December 31, HSBC’s profit before taxes increased by 92% to $5.2 billion and 24% to $14.9 billion, primarily due to an increase in net interest income.
A special dividend of $0.21 per share from the $10 billion sale of its Canadian business to Royal Bank of Canada (TSX:) was also mentioned as an option by the financial institution, which declared a second interim dividend of $0.23 per share.
Additionally, the bank anticipates increased earnings in 2023, with a net interest income of at least $36 billion, up from $32.6 billion in 2022. The bank stated that it will resume quarterly dividend payments in the first quarter of 2023 and is aiming for a dividend payout ratio of 50% for 2023 and 2024.
After years of transformation and cost-cutting, the lending giant’s earnings and outlook have improved. In May 2021, the company said it would be leaving consumer banking in the United States and will sell its French retail business.
The move was made with the intention of increasing profits and granting the requests of its largest shareholder, China’s Ping An Insurance (SS:), to separate its Asian division. The most recent effort to cut costs was to leave Canada.
Asia accounted for over 78% of HSBC’s earnings in 2022, making it HSBC’s biggest moneymaker by a wide margin. The largest market for the bank is Hong Kong.
According to HSBC Chairman Mark Tucker, “Asia as a whole has proven resilient, and there is the prospect of a strong rebound later in the year… We see strong and growing demand to connect clients in the Middle East with Asia’s economies, and vice versa.”
Despite this, the bank’s annual profit decreased by $1.4 billion to $17.5 billion, largely as a result of a $2.4 billion impairment on the planned sale of its French retail banking operations.
According to HSBC, a slowing Chinese property market and increased pressure on borrowers caused annual expected credit losses to rise sharply to $3.6 billion in 2022.
