AGS NEWS – Europe’s largest bank, HSBC, has announced a significant increase in its pre-tax profit, reaching $30.3 billion (£24 billion) in 2023.

The surge in profits was fueled by the impact of high interest rates, as central banks globally raised rates over the past 18 months to combat inflationary pressures.

Despite this substantial profit growth, HSBC’s earnings were slightly below expectations due to a slowdown in China’s economy.

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The bank’s profits were also impacted by a $3 billion charge related to its investment in China’s Bank of Communications. HSBC primarily generates profits in Asia, particularly in China and Hong Kong.

Analysts had anticipated HSBC’s pre-tax profit for 2023 to reach $34.1 billion, following the $17.1 billion reported in 2022.

However, HSBC’s Chief Executive, Noel Quinn, highlighted the bank’s record profit performance, allowing for the highest full-year dividend payout since 2008.

The bank’s robust financial performance was attributed to increased net interest margins, the difference between interest charged on loans and interest paid on deposits.

Despite these positive results, banking analyst Frances Coppola cautioned that the era of high interest rates is nearing its end.

HSBC also announced a new $2 billion share buyback, in addition to $7 billion in previous buybacks. Last year, the bank returned $19 billion to shareholders, reflecting its commitment to rewarding investors.

AGS NEWS reports that Investors are closely monitoring HSBC’s exposure to China’s property sector, which has faced challenges since 2020.

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With China experiencing deflation and economic slowdown, concerns persist about the country’s economic recovery.

Meanwhile, Standard Chartered, another Asia-focused bank, is set to release its financial results later this week.