Even as Europe’s largest bank posted a 92% increase in quarterly profit and promised more regular dividends and share buybacks, HSBC (HSBA.L) tempered investors’ expectations of a prolonged income windfall from higher global interest rates.
With its London headquarters (HSBA.L), the bank said on Tuesday that it would distribute a special dividend of $0.21 per share from the $10 billion sale of its Canadian operations.
Notwithstanding the payout guarantees, the lender’s shares dropped 2% in Hong Kong as investors compared experts’ moderately optimistic income predictions to the environment of rising rates.
HSBC gains more than many smaller banks from central bank increases because it has $1.3 trillion in client deposits, which allows it to charge a larger margin on its loans and mortgages.
Nonetheless, the bank stated that it anticipated net interest income to be at least $36 billion in 2023, below predictions of $37 billion and an annualized value of $38 billion estimated by analysts using the bank’s most recent quarterly statistics.
Chief Executive Noel Quinn told us that pressure from rival companies to boost deposit rates contributed to the modest estimates.
Quinn stated, “We are at ease with the consensus being about $37 billion; we are not seeking to alter that.”
Following pressure from its largest shareholder, Ping An Insurance Group, to separate its Asian division to increase returns—a move that HSBC has rejected—HSBC has been seeking to strengthen its relationship with investors.
HSBC’s London-listed shares, presently trading at their highest in three and a half years, had regained 45% from October 2022 lows when a reduction in quarterly earnings and an unexpected change in its chief financial officer frightened investors and left its shares plummeting 7%.
The bank’s 22 analysts’ average forecast was $17.5 billion.
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