HSBC Q2 Net Profit Climbs, Revenue View Positive; Stock Up

hsbc aug01 lt

Shares of HSBC Holdings plc gained around 6 percent in London as well as in Hong Kong trading after the banking major reported Monday higher net profit in its second quarter, and lifted dividend. Performance benefited from global interest rate rises on revenue and strong cost discipline. Pre-tax profit, meanwhile, was nearly flat and net operating income declined.

Looking ahead, the revenue outlook remains positive, and has improved further since full-year 2021 results, despite the uncertain macroeconomic environment.

The company expects net interest income of at least $31 billion for 2022 and at least $37 billion for 2023, based on the current market consensus for global central bank rates and continued mid-single-digit percentage lending growth expectations for 2022.

Further, the Board has approved an interim dividend for first half of $0.09 per ordinary share, up $0.02 per share on the first half of 2021, to be paid in cash.

The company expect a dividend payout ratio of around 50 percent for 2023 and 2024. It also intends to revert to paying quarterly dividends from the start of 2023.

For the second quarter, profit after tax was $5.77 billion, which included a $1.8 billion deferred tax gain, while last year's profit was $3.85 billion.

Profit before tax was $5.01 billion, relatively same as last year's $5.06 billion.

Operating profit dropped to $4.22 billion from last year's $4.29 billion.

On a reported basis, net operating income declined to $12.32 billion from prior year's $12.85 billion.

Revenue, ie., net operating income before change in expected credit losses and other credit impairment charges, grew to $12.77 billion from last year's $12.57 billion, despite the adverse impact of foreign currency translation differences.

Net interest income increased across all global businesses, mainly as a result of higher interest rates.

In London, HSBC shares were trading at 548 pence, up 6.7 percent. In Hong Kong, the shares settled on Monday at HK$51.85, up 4.96 percent.

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