Prime Highlights
- HSBC’s first-half pretax profit rose 23% to $19.5 billion, beating analyst forecasts and prompting a raised net interest income target above $46 billion.
- HSBC announced a share buyback of up to $1 billion, its first since revealing plans to take Hang Seng Bank private late last year.
Key Facts
- HSBC Holdings is Europe’s largest bank, with CEO Georges Elhedery pursuing a strategy of exiting markets where the lender lacks scale.
- Wealth revenue grew 18% year-on-year in the first half, driven largely by strong growth across HSBC’s Asian markets.
Background
HSBC Holdings reported a better-than-expected first-half profit and raised its net interest income target, driven by growth in lending revenue and wealth management fee income amid robust money flows.
Europe’s largest bank posted a pretax profit of $19.5 billion for the first six months of the year, up 23% from $15.8 billion a year earlier and above analyst forecasts of $18.9 billion. The strong performance reflected the payoff of HSBC’s Asian focus, where an overhaul targeting wealth and cross-border banking drove fee income growth alongside favourable interest rates.
The results capped a strong earnings season for Europe’s major banks, which have extended a recovery lasting more than two years, supported by a surge in trading activity and resilient interest income despite falling central bank rates.
HSBC lifted its guidance for net interest income this year, saying it now expects to exceed $46 billion, having previously said it would reach that level. The lender also announced the resumption of share buybacks with a plan of up to $1 billion, its first since announcing late last year that it would take smaller Hong Kong lender Hang Seng Bank private. A second interim dividend of $0.1 per share was set, following a similar payout earlier in the year.
Chief executive Georges Elhedery continued his strategy of streamlining the bank by exiting markets where it lacks scale, with HSBC having sold its Singapore insurance, Egypt retail banking and Australian mortgage businesses. Wealth revenue grew 18% year-on-year in the first half, backed by strong growth across Asian markets. HSBC’s Hong Kong-listed shares rose 0.8% following the earnings release, hitting a new high.