HSBC Holdings PLC reported second-quarter results on Monday. This is what we watched:
NET PROFIT: The Asia-focused bank posted $5.49 billion in net profit for the three months ended June 30, compared with $3.40 billion a year earlier. Net profit had been projected to decline to $2.70 billion, according to the lender’s compiled consensus for the period.
NET OPERATING INCOME: The lender’s net operating income for the quarter rose 1.6% compared with the same period a year earlier to $12.77 billion. It was slightly below analysts’ consensus forecast for $12.81 billion, taken from the lender’s compiled forecasts.
WHAT WE WATCHED:
–CET 1 RATIO: HSBC’s common equity Tier 1 ratio–a key measure of balance-sheet strength–fell to 13.6% from 15.8% as at Dec. 31. The rate was anticipated to be 13.8%, according to the bank’s compiled forecasts.
–NET INTEREST INCOME: The lender’s net interest income for the quarter came in at $7.45 billion, rising 13% from a year earlier. It forecasts net interest income of at least $31 billion for 2022 and at least $37 billion for 2023, based on current market consensus for global central bank rates and its estimate for mid-single-digit percentage lending growth this year.
–DIVIDENDS: HSBC said it will pay a first-half dividend of nine cents a share, compared with seven cents a share in first half last year but down from 18 cents in second half. It expects a dividend payout ratio of around 50% for 2023 and 2024, and it also intends to revert to paying quarterly dividends next year. However, it expects the dividend for the first three quarters will be reinstated at lower than 10 cents a share, which was the level paid up to the end of 2019, before the Covid-19 pandemic struck.
–RoTE: The lender’s return on tangible equity rose to 9.9% in first half, up 0.5 percentage point from the year-earlier period. It now targets a RoTE of at least 12% from 2023 onward, up from the previous target of at least 10% in 2023.
–SHARE PRICE: Investors reacted positively to HSBC’s second-quarter results. Shares at 0550 GMT were up 1.60 Hong Kong dollars, or 3.2%, at HK$51.00.