HSBC Reports Huge Q3 2023 Profits, Unveils Share Buy-Back

In light of HSBC’s robust 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 its profit after tax surging to $6.26 billion.

Beyond Profits: HSBC’s Q3 2023 Performance

This figure, as highlighted in a recent report, represents an impressive 235% increase when compared to the same period in the previous year when it stood at $2.66 billion. Profit before tax also experienced substantial growth for the quarter, rising by $4.5 billion to reach $7.7 billion.

Despite these strong results, HSBC’s numbers failed to meet the expectations set by analysts, who were projecting a profit after-tax figure of $6.42 billion and a profit before-tax figure of $8.1 billion for the third quarter.

The bank explained that a portion of this discrepancy was due to a $2.3 billion impairment incurred in the third quarter of 2022, which was related to the planned sale of its retail banking operations in France.

A noteworthy development is that $2.1 billion of this impairment was reversed in the first quarter of 2023 as the certainty of the transaction’s completion decreased. HSBC now anticipates reclassifying these operations as “held for sale” in the fourth quarter of 2023, at which point the impairment will be reinstated.

HSBC’s revenue in the third quarter witnessed substantial growth, reaching $7.71 billion, up from $3.23 billion in the same period a year ago. The bank attributed this surge to the higher interest rate environment, which provided significant support to its net interest income across all global business segments.

For the nine months ending in September 2023, HSBC reported an impressive profit after tax of $24.33 billion, a substantial increase from the $11.59 billion reported for the first nine months of 2022. HSBC’s Hong Kong-listed shares rose by 0.43% following the announcement.

HSBC Introduces a Share Buy-Back Program

In light of these robust results, the banking giant’s board approved a third interim dividend of 10 cents per share. Additionally, the bank revealed plans for a further share buy-back program of up to $3 billion, which is expected to commence shortly and be completed by its full-year results announcement on February 21, 2024.

“We’re 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 which total $0.30 per share,” stated Group CEO Noel Quinn. “This underlines the substantial distribution capacity that we have, even as we continue to invest in growth.”

The share buy-back program is expected to have a 0.4 percentage point impact on HSBC’s Common Equity Tier 1 capital ratio (CET1 ratio), a measure of financial resilience for European banks. Additionally, HSBC disclosed that its dividend payout ratio for 2023 and 2024, excluding material notable items, would be 50%.

The bank’s shares in London are up 0.65% to 604.90 GBX, showcasing investors’ positive disposition to the announced financial performance for the third quarter.

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