Along with plans for a new $3 billion share buyback, HSBC Holdings PLC (LSE:HSBA) announced robust growth in revenue and profit in the third quarter.
Pre-tax earnings for the quarter ended September 30, 2023, increased by US$4.5 billion to US$7.7 billion, according to the Asia-focused bank. This increase was attributed to both the favourable effect of rising interest rates and the US$2.1 billion reversal of an impairment related to the sale of its French subsidiary.
Revenue climbed by 40% to US$16.2 billion as non-interest revenue rose and net interest income expanded across all worldwide divisions due to the stronger interest rate environment.
“We have had three consecutive quarters of strong financial performance and are on track to achieve our mid-teens return on tangible equity target for 2023,” stated group chief executive Noel Quinn.
In addition to announcing a third interim dividend of US$0.10 per share, HSBC plans to repurchase up to US$3 billion worth of shares, which should be finished by the company’s 2023 full-year results in February.
The net interest margin of 1.70% was down 2 basis points from the previous quarter and up 19 basis points from a year ago. This is mostly due to a rise in clients transferring their deposits to term products, especially in Asia.
Operating expenses came in at US$8.0 billion, 2% more than the previous year, while bad debt charges of US$1.1 billion were essentially unchanged from the previous year.
A year ago, customer accounts saw a decline of US$33 billion, while customer lending balances saw a fall of US$24 billion.
The company’s 14.9% common equity tier 1 capital ratio increased by 0.2 percentage points over the previous year.
The bank stated that it expects net interest income to surpass US$35 billion in 2023 and that it will continue to aim for a return on average tangible equity in the mid-teens for 2023 and 2024.