Proactive Investors - HSBC Holdings PLC announced plans for a special pay-out to shareholders as it reported a fall in annual profits which were at the top end of City expectations.
Chief Executive Noel Quinn said the results reflected, "A strong net interest income performance reflected higher global interest rates, but there was also good underlying growth across the business in key areas, particularly those linked to our international network."
The Asia-focused bank posted pre-tax profit in the year to December 31 of US$17.53bn, down 7.3%, from US$18.91bn a year ago slightly better than company-compiled market consensus of US$17.49bn.
Quinn said, “This was due to a net expected credit loss charge of US$3.6bn compared with a net release of US$900mln last year, as well as the impairment of US$2.4bn relating to the planned sale of our retail banking operations in France."
Net interest income rose to US$32.61bn from US$26.49bn in 2021 ahead of the market consensus of US$32.04bn and ahead of HSBC's own guidance of US$32bn.
At the end of the year, the bank's common equity tier 1 capital ratio was 14.2%, down from 15.8% a year before.
The FTSE 100-listed lender paid a second interim dividend of US$0.23 per share, making a total for 2022 of US$0.32 per share. It is also considering a the payment of a special dividend of $0.21 per share as a priority use of the proceeds generated by completion of the sale of HSBC Canada.
The payment would take place in early 2024, HSBC said, with any additional surplus capital put towards organic growth and investment opportunities, as well as potential share buybacks.
Looking ahead and the bank remains confident of achieving its return on average tangible equity target of at least 12% for 2023 onwards and expects net interest income of at least US$36bn in 2023.
ECL charges are expected to be around 40bps in 2023, cost growth 3% and the CET1 ratio “within our medium-term target range of 14% to 14.5%.” HSBC also intends a dividend pay-out ratio of 50% for 2023 and 2024.