HSBC Shares Slide After Earnings

Investors focused on the bank's drop in quarterly earnings rather than the annual profits, the dividends or buybacks

Alliance News 21 February, 2024 | 3:22PM James Gard
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Shares in UK bank HSBC (HSBA) were the biggest faller in the FTSE 100 on Wednesday after it released annual results, losing nearly 9%. Investors reacted to a writedown on a Chinese bank and exposure to weaker commercial property. Analysts from described the results as “messy” despite the rise in annual profits.

While pretax profit in 2023 surged 78% to $30.35 billion (£24 billion) from $17.06 billion, quarterly profit dropped 81% to $977 million from $5.05 billion, partly due to a $3.0 billion impairment related to its investment in Shanghai-based BoCom; the chief executive described this writedown as an accounting adjustment rather than a sign of a wider malaise in China, whose economy has been struggling.

Total revenue rose 30% to $66.06 billion, from $50.62 billion. HSBC said this was driven by an increase in net interest income from all three of its global businesses, reflecting the higher interest rate environment. Net interest income rose 18% to $35.80 billion from $30.38 billion, while the net interest margin improved to 1.66% from 1.42%.

Read more: Top FTSE 100 Dividend Paying Stocks

Key Morningstar Metrics for HSBC

• Fair Value Estimate: 850p
• Current Price: 588p
• Morningstar Rating: ★★★
• Morningstar Economic Moat Rating: None
• Morningstar Uncertainty Rating: Medium 

HSBC Dividend Doubled

In addition, non-interest income increased by $10 billion, thanks to increased trading and $6.4 billion in fair value income, mostly in Global Banking and Markets.

Profit also got a boost from the sale of its retail banking operations in France, and the acquisition of Silicon Valley Bank UK Ltd.

HSBC said it has approved a fourth interim dividend of $0.31 per share, bringing the total dividend to $0.61 per share, almost double that of $0.32 in 2022. HSBC also said it will begin a share buyback of up to $2.0 billion, which it expects to complete by the announcement of its first quarter results.

James Gard contributed to this article

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
HSBC Holdings PLC646.20 GBX0.25Rating

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