HSBC profit misses estimates; bank announces $2 billion share buyback

HSBC‘s full-year 2023 pre-tax profit missed analysts’ estimates, hit by impairment costs linked to the London-based lender’s stake in a Chinese bank — sinking its shares by as much as 3%.

Europe’s largest bank by assets saw its pre-tax profit climb about 78% to $30.3 billion in 2023 from a year ago, according to its statement released Wednesday during the mid-day trading break in Hong Kong. That missed median estimates of $34.06 billion from analysts tracked by LSEG.

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Chief Executive Noel Quinn also announced an additional share buyback of up to $2 billion and the highest full-year dividend per share since 2008. With three share buy-backs in 2023 totaling $7 billion, Quinn said the bank returned $19 billion to shareholders last year.

The bank suffered a “valuation adjustment” of $3 billion on its stake in Bank of Communications, Quinn said.

HSBC’s Hong Kong shares reversed gains of about 1% after trading resumed, falling as much as 3.2% in early afternoon trade. The benchmark Hang Seng Index was up nearly 3%.

Here are the other highlights of the bank’s full year 2023 financial report card:

• Revenue for 2023 increased by 30% to $66.1 billion, compared with the median LSEG forecast for about $66 billion.
• Net interest margin, a measure of lending profitability, was 1.66% — compared with 1.48% in 2022.
• Common equity tier 1 ratio — which measures the bank’s capital in relation to its assets — was 14.8%, compared with 14.2% in 2022.
• Basic earnings per share was $1.15, compared with the median LSEG forecast for $1.28 in 2023 and 75 cents for 2022.

This is a developing story. Please check back for more details.