HSBC Q3 profits soar, announces further share buyback and dividend plans

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HSBC Q3 profits soar, announces further share buyback and dividend plans
Credit: © Reuters.

HSBC Holdings (NYSE: HSBC ) (LON:HSBA) reported a significant surge in its Q3 2023 pre-tax profit, which rose to $7.7 billion, a substantial increase from the $3.2 billion reported in Q3 2022. This robust growth led to a 1.2% rise in pre-market trading shares. The bank's total revenues also experienced a notable upswing, climbing by 40.4% YoY to reach $16.16 billion, primarily due to increased net interest income.

The Commercial Banking segment of HSBC saw a 40% YoY rise in pre-tax profit to $2.85 billion. Conversely, the Global Banking and Markets segment witnessed a decrease of 10% to $1.32 billion, attributed to higher costs. The Corporate Centre segment reported a pre-tax profit of $765 million.

On Monday, HSBC announced a third interim dividend of 10 cents per share and revealed plans for an additional share buyback of up to $3 billion, which is expected to be completed by February 21, 2024.

For the year 2023, HSBC anticipates net interest income above $35 billion and targets a 3% operating expense growth. The bank expects additional expenses due to technology and operations expenditures and performance-related pay increases. It also plans to manage the CET1 ratio within its medium-term target of 14-14.5% and expects ECL charges to be around 40 basis points.

Moreover, HSBC anticipates maintaining a dividend payout ratio of 50% for both 2023 and 2024. In comparison with other major banks, Barclays (LON: BARC ) reported a Q3 2023 net income of £1.27 billion ($1.61 billion), down by 16% YoY due to higher credit impairment charges, while Deutsche Bank (ETR: DBKGn ) reported a Q3 2023 profit of €1.03 billion ($1.12 billion), down by 7.5% YoY.

HSBC is focusing on initiatives to improve operating efficiency and increase its market share in Asia. As part of these plans, the bank expects a return on tangible equity in the mid-teens for 2023 and 2024, although this would naturally lead to increased expenses.

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