In light of HSBC’s strong results, the banking giant’s board approved a third interim dividend of 10 cents per share.
HSBC Holdings PLC (LSE: HSBA.L), Europe’s largest bank by assets, has reported remarkable financial results for the third quarter of 2023, with after-tax profit rising to $6.26 billion.
Beyond profits: HSBC’s Q3 2023 performance
This figure, as recently exposed reportCompared to the same period last year, when it stood at $2.66 billion, representing an impressive growth of 235%. Profit before tax also saw a substantial increase during the quarter, rising by $4.5 billion to $7.7 billion.
Despite these strong results, HSBC’s figures failed to meet expectations set by analysts, who were projecting after-tax profit of $6.42 billion and pre-tax profit figures of $8.1 billion for the third quarter.
The bank reported that part of the discrepancy was due to a $2.3 billion impairment loss in the third quarter of 2022 related to the planned sale of its retail banking operations in France.
A notable development is that $2.1 billion of this loss was reversed in the first quarter of 2023 as the certainty of completion of the transaction decreased. HSBC now expects to reclassify these operations as “held for sale” in the fourth quarter of 2023, at which point the impairment will be reinstated.
HSBC saw a substantial increase in revenue in the third quarter, rising to $7.71 billion from $3.23 billion in the same period a year earlier. The bank attributed the surge to a high interest rate environment, which provided significant support to its net interest income across all global business sectors.
For the nine months ending September 2023, HSBC reported an impressive after-tax profit of $24.33 billion, significantly higher than the $11.59 billion reported for the first nine months of 2022. HSBC’s Hong Kong-listed shares rose 0.43% after the announcement.
HSBC introduces share buy-back program
In light of these strong results, the banking giant’s board approved a third interim dividend of 10 cents per share. Additionally, the bank revealed plans for another share buy-back program of up to $3 billion, which is expected to commence shortly and be completed by the time it announces its full year results on February 21, 2024.
“We are pleased to again reward our shareholders. We have now announced three share buybacks in 2023 totaling up to $7 billion, as well as three quarterly dividends, totaling $0.30 per share,” said Noel Quinn, group CEO. “This underlines the substantial distribution capability we have, even as we continue to invest in growth.”
The share buy-back program is expected to have an impact of 0.4 percentage points on HSBC’s Common Equity Tier 1 capital ratio (CET1 ratio), a measure of financial flexibility for European banks. Additionally, HSBC revealed that its dividend payout ratio for 2023 and 2024, excluding notable items, will be 50%.
The bank’s shares are up 0.65% at GBX604.90 in London, reflecting a positive attitude from investors towards the financial performance announced for the third quarter.
Benjamin Godfrey is a blockchain enthusiast and journalist who loves writing about real-life applications of blockchain technology and innovations to promote general acceptance and worldwide integration of the emerging technology. His desire to educate people about cryptocurrencies drives his contributions to well-known blockchain media and sites.
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