HSBC posted record profits of more than $30 billion (£24 billion) for the last year, figures that are bound to respark the debate about bank profiteering and increase calls for a windfall tax on the biggest lenders.
With the UK in recession and consumers struggling, high bank profits are unlikely to play well with the public.
Chief executive Noel Quinn, who declined to speak to the Evening Standard directly for the first time in years, told shareholders that the bank would pay out its highest dividend since the financial crisis of 2008 and buy back another $2 billion of shares to boost investor returns.
About 20% of those profits come from the UK with most of the rest coming from Asia. They were still well short of what investors were expecting -- $34 billion was pencilled in by bank analysts.
Concern about the strength of the Chinese economy could hit HSBC shares today. That $30 billion profit is still up nearly 80% from a year ago.
However, the record-high annual profit was marred by a $3 billion impairment on the bank's stake in China's Bank of Communications.
In early trading the shares fell 3% which values the business at £122 billion.
Quinn said in a statement: “We have a strong platform for growth with the opportunities that exist within our two home markets and across our international wholesale, market-leading transaction banking, and wealth management businesses. We are focused on capturing these growth opportunities, improving our earnings sustainability and targeting mid-teens returns in 2024.”
He was paid more than £10 million last year, one of the highest pay deals for any UK executive.
Net interest margin --- the gap between what banks pay to savers and charge borrowers – was up smartly to 1.66%, “reflecting higher interest rates” the bank admitted.
Some City analysts think this this is likely to be the best year for banks for some time and are advising clients to ditch bank stocks.
HSBC recorded “impairment charges” of $3.4 billion, a bit down on last year but a sign that some borrowers are struggling.
Yesterday Barclays revealed that profits were down on the year. Tomorrow Lloyds Bank, a more direct measure of how the UK economy is doing, will reveal profit and bad debt figures.
HSBC rewarded investors with a fresh $2 billion share buyback, and said it would consider a special dividend of $0.21 per share in the first half of 2024 once its Canada disposal is complete.
In January, HSBC was hit with a £57 million fine for “serious failings” in its systems to protect customer deposits.
The bank is planning to desert its Canary Wharf London HQ by 2027.
It has lately cut mortgage rates along with other lenders.
HSBC had revenues for the year of $66.1 billion.
In October 2022 finance director Ewen Stevenson “stepped down” -- a shock to some investors who thought he was a key part of the bank recovery.
Georges Elhedery replaced him.
On a web call today, Quinn said the fall in UK inflation should help the economy. “That creates the conditions to cut interest rates,” he said.
HSBC says it is now “more efficient and competitive” than it was before.
