Profits more than doubled to $7.7 billion (£6.35 billion) in the three months to September from the same time a year earlier, according to HSBC, however this was lower than expected.
It claimed to have profited from rising interest rates, which allow it to charge greater interest rates when lending to individuals and companies. On Thursday, the Bank of England will publish its most recent interest rate decision.
It is largely predicted to remain at 5.25% for a second month. Previously, the central bank has hiked interest rates 14 times in a row, beginning with a historic low of 0.1%.
Other central banks have been raising interest rates as well; the US Federal Reserve will announce its next decision on Wednesday, and HSBC stated that “the higher interest rate environment” has boosted global economy.
This year, the business anticipates its net interest income, which is the difference between what it gets from lending money and what it pays to savers and depositors, to exceed $35 billion. According to the most recent figures for the three months ending September 30, it increased to $9.2 billion from $8 billion in the same time previous year. Banks have been pressed to pass on increased interest rates to depositors, notably by Chancellor Jeremy Hunt, who stated in June that it was “taking too long.”
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According to Alicia Garcia-Herrero, head economist for the Asia Pacific area at investment bank Natixis, banks made very little money from lending money before interest rates began to rise, but they still had to compensate people and companies that deposited money.
“Let us not forget that banks were previously in bad shape due to a lack of space.” So they’ve gone from having no room to having a lot of room,” she said the media. HSBC announced it will return another $3 billion to shareholders, bringing the total amount returned to investors this year to $7 billion. It will also distribute dividends.
Although the bank’s earnings increased during the last three months, it fell short of the $8.1 billion predicted by experts. HSBC’s operational expenditures increased as a result of performance-based compensation, increasing technology costs, and the impact of inflation. The government declared last week that the ceiling on banker bonuses will be lifted. It will go into effect on Tuesday, October 31st, nearly a decade after it was adopted following the 2008 financial meltdown.
HSBC reduced its incentive pool by 4% to $3.4 billion in the previous fiscal year. The bank, which is headquartered in London, produces the majority of its revenue in Asia. It stated that it had received a $500 million damage as a result of China’s crisis-stricken property market, which was headed by Evergrande. We continue to actively monitor risks relating to our exposures in mainland China’s commercial real estate sector, and the forward economic picture, notably in the UK, remains unclear, it added.
Standard Chartered, HSBC’s Asia-focused rival, announced an unexpected drop in third-quarter earnings due to a near-$1 billion combined damage from its exposure to China’s real estate and banking sectors last week.
HSBC Holdings (originally The Hongkong and Shanghai Banking Corporation) is a British universal bank and financial services corporation based in London, England, having historical and commercial ties to East Asia and an international presence.
With US$2.953 trillion in assets as of December 2021, it is the largest European bank by total assets, surpassing BNP Paribas. HSBC had $10.8 trillion in assets under custody (AUC) and $4.9 trillion in assets under administration (AUA) in 2021.
HSBC has offices, branches, and subsidiaries in 62 countries and territories, servicing 39 million clients throughout Africa, Asia, Oceania, Europe, North America, and South America. It was placed 20th in the world in the Forbes rankings of major corporations based on revenue, profits, assets, and market value as of 2023.
