The bank posted pretax profit in the six months to June of $21.56 billion, down from $21.66 billion in the same period of last year.

HSBC’s earnings results

The first-half figure of pretax profit came in well above the $20.5 billion average of broker estimates compiled by HSBC, as per reports.

“We are growing and investing in our international retail and wealth business to sit alongside this, which is helping to diversify revenue,” HSBC’s outgoing CEO Noel Quinn said Wednesday.

“Each of these strengths contributed to a good revenue performance in the first half of 2024, supported by higher interest rates.”

The new return target and earnings that beat market expectations should give investors confidence, Jefferies analyst Joe Dickerson added.

HSBC’s revenue

HSBC’s revenue was up 1.1% year-on-year to $37.3 billion, in a performance HSBC attributed to the “impact of higher consumer activity in our Wealth products in Wealth and Personal Banking (‘WPB’), and in Equities and Securities Financing in Global Banking and Markets (‘GBM’).”

The lender’s wealth revenue picked up by 12% to $4.3 billion in the first six months to June, with noted growth in investment distribution, asset management and life insurance.

The bank outlined its priorities of diversifying its revenues and maintaining a firm foothold in what it described as its “critical” home markets of Hong Kong and the U.K. — it noted 345,000 new-to-bank customers opening accounts in the former region in the first half of the year, with international customers up 8% to 2.7 million in Britain over the same period.

HSBC approved dividend

The bank also approved a second interim dividend of $0.10 per share and announced a share buyback of up to $3 billion, which it said it expects to complete within three months.

“That takes our total distribution to shareholders in 18 months to over $34 billion,” HSBC’s Quinn told CNBC Wednesday. “And I think the standout performance is, I think, our ability to continue to grow revenue from alternative sources other than interest income.”

HSBC’s new goals

Europe’s biggest bank also set out a new goal for its return on average tangible equity – a key performance target – to be in the mid-teens in 2025, matching its estimate for 2024.

As HSBC is due to welcome new CEO Georges Elhedery in September following the retirement of Noel Quinn, said it had succeeded in reducing its sensitivity to rate cuts through an insurance strategy known as a structural hedge.

HSBC return on equity

HSBC’s CET1 capital ratio picked up to 15.0%, up by 0.2 percentage points compared with the Q4 of last year and above the lender’s guidance of its medium-term target range of 14% to 14.5% for the metric.

The bank also declared a return on average tangible equity excluding notable items of 17.0% over January-June, down from 18.5% in the same period of last year. HSBC provided new guidance of “mid-teens return on average tangible equity in 2025,” in line with its 2024 outlook.

“The strong performance of the business gives us the confidence to say that we’ll be mid-teens return in 2025 as well,” said Quinn. Addressing the broader outlook, he touched on the bank’s performance in the U.K., saying, “I think there are some encouraging signs in there for future economic growth, and there’s certainly a strong resilient economy at the moment.”

Stock update

HSBC share price which is London-listed picked up 3.12% at 08:42 a.m. London time, just after local markets opened, while Hong Kong-listed HSBC share price were up roughly 4.4%. This is as investors cheered its stable first-half profit growth, gains in wealth management income and narrowing losses in Chinese real estate.

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On the 4^th of March, HSBC Holdings reported a fall in its full year preliminary profit for the year ended December 2012. The bank cited debt revaluation and the US related money-laundering fine as some of the major determinants which led to declining profits.

HSBC Missed Profit Estimates

HSBC Holdings PLC posted lower-than-expected full year profits driven by robust regulatory charges and hefty money laundering fines. According to a statement released by HSBC Holdings PLC, pre-tax profits fell by slightly more than 5.8 percent to $20.6 billion. The company was expected to post full year profits worth approximately $23.4 billion. Moreover, revenue for the period decreased by nearly 5.5 percent to $68.3 billion, from $72.2 a year earlier. Also, net profit for the year 2012 declined to roughly $13.4 billion, compared to about $16.2 billion in 2011. In the face of heavy regulatory charges, HSBC Holdings PLC fell short of profit estimates and performance targets set by itself.

Despite declining full year profits, HSBC Holdings PLC witnessed an increase in its underlying profits by around 18 percent to nearly $16.4 billion. Moreover, underlying revenue, the actual revenue realized by the bank, rose by approximately 7 percent to nearly $63.5 billion for the year ended December 2012. The increase in sales included a 10 percent rise in global marketing which contributed to $18.2 billion of the revenues. In the face of rising creditworthiness of the bank, HSBC CEO Stuart Gulliver underlined that: “HSBC made significant progress in 2012. First and foremost, we grew our business. We increased revenues, performed well in most faster-growing markets and enjoyed a record year in Commercial banking.

HSBC Hit by Fine Costs

On the 11^th of December, HSBC Holdings PLC decided to pay as much as $1.9 billion to close the offending and disconcerting American criminal probe into money-laundering allegations. The bank blames the hefty regulatory charge for poor profits, including a $500-million charge spent for revising its systems in order to check laundering on a regular basis. In the third quarter of 2012, HSBC had set aside as much as $800 million as a provision against a key settlement. Since Stuart Gulliver was named the Chief Executive Officer of HSBC Holdings PLC, he has taken radical steps to incur savings. The bank withdrew from 47 businesses which enhanced the annual profits. Moreover, HSBC informed that it is planning to sell its Panama unit for an estimated price of $2.1 billion.

The bank plans to reduce costs by $3.6 billion and downsize its workforce by eliminating 30,000 jobs worldwide. Europe’s biggest bank, which operates in 80 different countries with over 60 million customers, anticipated a $5.2 billion charge against debt revaluation adjustments. According to the result statement, HSBC Holdings PLC would increase dividend by 10 percent to approximately $8.2 billion or 45 cents per share. In addition, return on equity dropped to nearly 8.9 percent, from 10.5 percent a year earlier. Following the announcement of declining profits, shares of HSBC Holdings PLC dipped nearly 2.6 percent to 709 pence at London Stock Exchange.

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