HSBC's Q3 profits soar as bank announces additional share buyback

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HSBC's Q3 profits soar as bank announces additional share buyback

HSBC has reported a stellar financial performance for the third quarter of 2023, with pre-tax profits skyrocketing to $7.7bn (£6.4bn), more than doubling from the previous year's Q3 figure of $3.229 billion. The bank's robust growth was broad-based across all businesses and regions, with the wealth business drawing in $34bn (£28bn) of net new invested assets and growing wealth balances by 12%.

The after-tax profit reached $6.3bn (£5.2bn), and revenue surged by 40% to $16.2bn (£13.4bn). The bank's operating income hit $7.122 billion, and net operating profit rose to $15.090 billion. Furthermore, net interest income improved, reaching $9.248 billion from last year's $8.006 billion.

However, HSBC also reported a slight rise in operating expenses due to technology costs, inflation, and increased performance-related pay.

In addition to the strong Q3 results, the bank announced plans for an additional share buyback of up to $3bn, expected to begin soon and conclude by their full-year results announcement on February 21, 2024.

CEO Noel Quinn highlighted HSBC's substantial distribution capacity and commitment to rewarding shareholders with three share buy-backs totalling $7bn (£5.8bn) and quarterly dividends of $0.30 per share. The bank is aiming for a mid-teens return on tangible equity in 2023.

HSBC's Q3 performance was also impacted by a $2.3 billion impairment tied to the intended sale of their retail banking operations in France. A reversal of $2.1 billion was noted in Q1 2023 amidst growing uncertainty surrounding the sale's finalization.

InvestingPro Insights

HSBC's impressive financial performance in Q3 2023 is reflected in the real-time data from InvestingPro. The bank's market cap stands at a robust 139.51B USD, and its price-to-earnings (P/E) ratio is a low 5.98, suggesting that the bank's shares are undervalued. Revenue growth over the last twelve months as of Q2 2023 was a healthy 28.13%, which aligns with the bank's reported surge in revenue.

InvestingPro Tips shed further light on HSBC's financial health. The bank's accelerating revenue growth and consistently increasing earnings per share are promising signs for investors. In addition, HSBC has raised its dividend for 3 consecutive years, which is a testament to the bank's strong earnings and management's confidence in its continued profitability.

For those interested in further insights, there are 5 additional InvestingPro Tips available for HSBC. Access these valuable tips and more by subscribing to InvestingPro's premium services here.

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