Core Viewpoint - HSBC Holdings reported a strong performance for the first three quarters of 2023, with revenue and profits showing positive growth, driven by wealth management and personal banking, as well as global banking and capital markets [1][2]. Financial Performance - For the first nine months of 2023, HSBC's revenue increased to $54.3 billion, up by $1.3 billion or 2% compared to the same period in 2022 [1]. - The pre-tax profit rose by $700 million to $30 billion, while the post-tax profit reached $24.4 billion, an increase of $100 million [1]. - In Q3 2023, revenue grew to $17 billion, an increase of $800 million or 5% year-on-year [1]. - The pre-tax profit for Q3 was $8.5 billion, up by $800 million, and the post-tax profit was $6.7 billion, an increase of $500 million [1]. Dividend and Share Buyback - HSBC's board approved a third interim dividend of $0.10 per share [1]. - The company announced a share buyback program of up to $3 billion, expected to be completed within four months [2]. Organizational Restructuring - HSBC is simplifying its organizational structure into four main business segments: "Hong Kong," "UK," "Corporate and Institutional Banking," and "International Wealth Management and Premier" [2][4]. - The restructuring aims to enhance strategic execution efficiency and is not intended as a prelude to business separation [2][3]. - A new Group Operations Committee will be established, replacing the existing Group Executive Committee, to streamline decision-making [4]. Cost Management and Future Guidance - The management plans to reduce overlapping roles and simplify high-level positions, with potential layoffs in the coming months, although no specific targets have been set [4]. - HSBC maintains its guidance for the next two years, targeting a return on tangible equity (ROTE) of 14% to 16% and a net interest income of approximately $43 billion for fiscal year 2024 [5].

Investment Rating - The report maintains a **Neutral** rating for HSBC Holdings PLC (5 HK) with a target price of HKD 61.51 [55] Core Viewpoints - HSBC Holdings PLC's Q3 2024 revenue and profit exceeded expectations, driven by strong non-interest income growth and reduced provisions [1][2] - Revenue increased by **5.2% YoY**, surpassing the Bloomberg consensus estimate of **-0.1%**, while net profit attributable to common shareholders rose by **9.2% YoY**, outperforming the consensus estimate of **-2.4%** [2][7] - Non-interest income surged by **35.4% YoY**, significantly higher than the expected **9.5%**, while net interest income declined by **17.4% YoY**, below the consensus estimate of **-12.0%** [2] - The cost-to-income ratio improved to **47.9%**, down **1.4 percentage points YoY**, better than the consensus estimate of **51.1%** [2] Business Performance - **Wealth and Personal Banking** revenue grew by **10.3% YoY**, exceeding the consensus estimate of **2.8%** [3][6] - **Commercial Banking** revenue declined by **0.7% YoY**, but still outperformed the consensus estimate of **-2.0%** [3][6] - **Global Banking and Markets** revenue increased by **13.5% YoY**, surpassing the consensus estimate of **3.7%** [3][6] - Total customer loans grew by **3.5% YoY**, higher than the consensus estimate of **0.8%**, while total deposits increased by **6.2% YoY**, above the consensus estimate of **2.5%** [3] Financial Metrics - The net interest margin (NIM) declined by **16 basis points QoQ** to **1.46%**, below the consensus estimate of **1.57%** [3] - The non-performing loan (NPL) ratio increased by **4 basis points QoQ** to **2.47%**, slightly higher than the consensus estimate of **2.45%** [3] - The CET1 ratio improved to **15.2%**, up **0.3 percentage points YoY**, exceeding the HSBC analyst estimate of **14.9%** [4] - Return on equity (ROE) increased by **0.9 percentage points YoY** to **14.4%**, above the consensus estimate of **13.5%** [4] Key Drivers - The reduction in credit loss provisions to **USD 986 million**, down **7.9% YoY**, contributed to the better-than-expected profit, driven by lower provisions in the Commercial Banking and Global Banking & Markets segments, particularly in mainland China's commercial real estate sector [3] - The strong performance in non-interest income, particularly in wealth management and capital markets, offset the decline in net interest income [2][3]

Financial Performance - The pre-tax profit for Q3 2024 increased by $800 million to $8.5 billion compared to Q3 2023, driven by growth in wealth management and personal banking, as well as foreign exchange, equities, and global debt market revenues [2]. - Revenue for Q3 2024 rose to $17 billion, an increase of $800 million or 5% from Q3 2023, reflecting increased customer activity in wealth management and personal banking [2]. - For the first nine months of 2024, pre-tax profit increased by $700 million to $30 billion compared to the same period in 2023 [3]. - The after-tax profit for the first nine months of 2024 was $24.4 billion, an increase of $100 million from the same period in 2023 [3]. - The reported pre-tax profit for the nine months ending September 30, 2024, was $30.032 billion, compared to $29.371 billion for the same period in 2023, reflecting a growth of 2.3% [35]. - The pre-tax profit for the nine months ended September 30, 2024, was $30,032 million, up from $29,371 million in the same period of 2023, reflecting a growth of 2.2% [94]. Revenue and Income - Revenue increased to $54.3 billion, a rise of $1.3 billion or 2% compared to the first nine months of 2023, driven by increased customer activity in wealth management and global banking [4]. - Total revenue for the same period was $54.290 billion, up from $53.037 billion year-over-year, indicating an increase of 2.4% [35]. - The total revenue for the nine months ended September 30, 2024, was $54,290 million, a slight increase from $53,037 million in the same period of 2023, representing a growth of 2.4% [94]. - The company reported a diluted earnings per share of $1.22 for the third quarter of 2024, compared to $1.14 in the same quarter of 2023, reflecting a year-over-year increase of 7.0% [37]. Operating Expenses - Operating expenses for Q3 2024 increased by $200 million to $8.1 billion, a rise of 2% compared to Q3 2023, mainly due to increased technology spending and inflation effects [2]. - Operating expenses rose to $24.4 billion, an increase of $1 billion or 4% year-over-year, primarily due to increased technology spending and inflation effects [4]. - The operating expenses for the nine months ended September 30, 2024, were $24,439 million, compared to $23,425 million in the same period of 2023, an increase of 4.3% [94]. Credit Losses - The expected credit losses for Q3 2024 were $1 billion, a decrease of $100 million from Q3 2023, reflecting reduced provisions in commercial banking and global banking and markets [2]. - Expected credit losses improved to $(986) million from $(1,071) million, indicating a reduction of 7.9% year-over-year [40]. - Expected credit losses for the first nine months of 2024 were $900 million, an increase of $200 million compared to the same period in 2023, reflecting higher provisions in the Mexican legal entity [71]. - The expected credit losses and other credit impairment charges were $(2,052) million for the nine months ended September 30, 2024, compared to $(2,416) million in the same period of 2023, showing a reduction of 15.1% [94]. Capital and Dividends - The common equity tier 1 capital ratio was 15.2%, an increase of 0.2 percentage points from Q2 2024, primarily due to capital generation [2]. - The board approved a third interim dividend of $0.1 per share and announced a share buyback of up to $3 billion, expected to be completed within four months [2]. - The target common equity tier 1 capital ratio is maintained in the range of 14% to 14.5%, with a dividend payout ratio target of 50% for 2024 [5]. - A special dividend of $0.21 per share was approved by the board and will be paid in June 2024 alongside the first dividend payment [30]. Business Segments Performance - Wealth management revenue reached $6.696 billion in Q3 2024, up 16% from $5.772 billion in Q3 2023 [69]. - Wealth management and personal banking revenue decreased to $21,723 million from $22,678 million, a decline of 4.2% year-over-year [38]. - Global Banking and Markets revenue increased to $13,154 million, up 8.2% from $12,154 million in the prior year [38]. - The trading banking business generated $19.8 billion in revenue during the first nine months of 2024, remaining stable compared to the same period in 2023 [12]. Strategic Initiatives and Market Outlook - The company continues to integrate net-zero carbon elements into its operations and aims to achieve net-zero carbon emissions in its business and supply chain by 2030 [11]. - HSBC plans to sell its businesses in Argentina and Armenia, expecting to complete these transactions in Q4 2024, while also having completed the sale of its retail banking operations in France, Canada, and Russia [13]. - The company is actively managing the potential impacts of the real estate downturn on its customer and commercial real estate portfolio [134]. - HSBC is closely monitoring the impact of geopolitical tensions, including the ongoing conflicts in Ukraine and the Middle East, on its operations and risk profile [134]. Customer Loans and Accounts - Customer loans increased by $30 billion compared to Q2 2024, with a fixed exchange rate basis showing an increase of $2 billion [2]. - Total customer loans reached $968.653 billion, an increase of $30 billion, with a favorable currency translation impact of $28 billion primarily from HSBC UK [64]. - Customer accounts amounted to $1.7 trillion, up by $67 billion, including a favorable currency translation impact of $47 billion, mainly from HSBC UK [65]. Market Conditions and Economic Outlook - Global economic activity continued to grow, led by the US and China, while the EU's growth remains relatively slow [134]. - The US Federal Reserve and the Bank of England both reduced interest rates in Q3 2024, following the European Central Bank's decision earlier in the year [134]. - The real estate sector faces challenges in major markets, with high inventory levels and declining prices in Hong Kong and mainland China [134].

Financial Performance - HSBC reported a pre-tax profit of $21.6 billion for the first half of 2024, a slight decrease from $21.7 billion in the same period of 2023[14]. - The net profit after tax for the first half of 2024 is $17,665 million, compared to $18,071 million in the same period of 2023[71]. - The pre-tax profit for the first half of the year was $21.6 billion, stable compared to the same period in 2023, including a $4.8 billion gain from the sale of the Canadian banking business[35]. - The reported pre-tax profit for the first half of 2024 is $21.6 billion, similar to the first half of 2023, with a gain of $4.8 billion from the sale of the Canadian banking business included[101]. - The company reported a net profit of $17,665 million for the period ending June 30, 2024[192]. - The total comprehensive income for the period reached $12,510 million, driven by strong performance across various segments[173]. Revenue and Income - Revenue increased to $33.7 billion, a 2% rise on a constant currency basis, primarily driven by growth in wealth management and personal banking[23]. - The reported revenue for the first half of 2024 was $37.3 billion, an increase of 1% compared to the first half of 2023, and a 3% increase when adjusted for constant currency[41]. - The total revenue for the first half of 2024 was $10.9 billion, a decrease of $1.2 billion or 10% compared to the same period in 2023, primarily due to the non-recurrence of a $1.6 billion gain from the acquisition of UK Silicon Valley Bank[150]. - The wealth management and personal banking segment saw non-interest income increase by 38% to $6.5 billion, reflecting strong growth in private banking and investment products[109]. - The company reported a total revenue of $8,158 million, with net income after expenses amounting to $6,200 million[177]. Operating Expenses - The bank's operating expenses increased by 7% to $16.3 billion compared to $15.5 billion in the first half of 2023[14]. - Operating expenses for the first half of 2024 were $16.3 billion, an increase of $0.8 billion or 5% due to technology investments and inflation[101]. - Operating expenses rose by 5% to $7.4 billion, driven by continued investment in Asian wealth management and technology[114]. Capital and Ratios - The bank's common equity tier 1 capital ratio stood at 15%[14]. - The common equity tier 1 capital ratio was 15%, up 0.2 percentage points from Q4 2023, due to a reduction in risk-weighted assets[23]. - The leverage ratio stands at 5.7%[74]. - The average liquidity coverage ratio is 137%[74]. - The cost-to-income ratio for the first half of 2024 is 43.7%, an increase from 41.9% in the first half of 2023[71]. Customer and Market Growth - Customer accounts reached $16 trillion, reflecting growth across all business segments, particularly in Asia[23]. - The international client base reached 7 million in H1 2024, generating revenue three times that of domestic clients[45]. - The number of international retail customers grew by approximately 11%, reaching a total of 7 million, with a 6% increase in revenue from these customers[52]. - In Hong Kong, the bank opened accounts for 345,000 new customers in the first half of 2024, a 77% increase compared to the first half of 2023[57]. Sustainable Financing and Investment - The total sustainable financing and investment facilitated by HSBC reached $339.9 billion since January 2020[14]. - The company aims to provide and facilitate between $750 billion to $1 trillion in sustainable financing and investment by 2030[20]. - The company has provided and facilitated $45.5 billion in sustainable financing and investment in the first half of 2024, with a cumulative total of $339.9 billion since January 1, 2020[20]. - HSBC aims to support clients in transitioning to net-zero carbon emissions by providing $750 billion to $1 trillion in sustainable financing by 2030[85]. Strategic Initiatives - The bank aims to enhance customer service and increase shareholder returns through a clear strategy focused on revenue generation and profit growth[13]. - HSBC's strategy emphasizes becoming the preferred international financial partner for customers, supporting long-term sustainable operations[13]. - The company plans to sell its operations in Argentina, with a pre-tax loss of $1.2 billion recognized in the first quarter of 2024[18]. - The company completed the sale of its retail banking operations in France, Canada, and Russia in the first half of 2024, with a gain of $4.8 billion from the Canadian sale[18]. Digital Transformation - HSBC's digital service usage among customers increased, reflecting a growing trend towards digital banking solutions[14]. - The company continues to invest in digital services to enhance customer engagement and streamline processes[83]. - As of May 2024, 83.9% of commercial banking clients regularly used digital services, up 1.2 percentage points from May 2023[47]. - In H1 2024, 80% of wealth management and personal banking international accounts were opened digitally, a significant increase of 34 percentage points compared to H1 2023[47]. Diversity and Inclusion - The bank's commitment to diversity is evident, with 34.4% of senior leadership positions held by women, up from 34.1% at the end of 2023[14]. - HSBC's commitment to diversity is reflected in its leadership, with 34.4% of senior leadership positions held by women and 3.1% by individuals from Black ethnic backgrounds as of mid-2024[93]. Future Outlook - The expected net interest income for 2024 is approximately $43 billion, contingent on global interest rate trends[18]. - The company aims to achieve an average tangible equity return of approximately 15% for both 2024 and 2025, excluding significant items[18]. - The company has established a new variable compensation structure to enhance transparency and maintain performance-based rewards[20].

Investment Rating - The report maintains an "Add" rating for the company [1][3] Core Views - The company aims to achieve an average tangible equity return of approximately 15% for both 2024 and 2025, excluding notable items [3] - The expected net interest income for the banking business in 2024 is projected to be around $43 billion, an increase from previous estimates [3][19] - The company plans to maintain a dividend payout ratio of 50% for 2024 and has announced a share buyback program of up to $3 billion, expected to be completed within three months [3][5] Financial Highlights - Total revenue for 2023 is projected at $66.1 billion, with a year-on-year growth of 30.5% [2] - Net profit attributable to ordinary shareholders is expected to be $22.4 billion in 2023, reflecting a 56.4% increase year-on-year [2] - Earnings per share (EPS) is forecasted to be $1.15 for 2023, with dividends per share expected to be $0.61 [2] - For the first half of 2024, the company reported a stable pre-tax profit of $21.6 billion, with total revenue increasing by $0.4 billion to $37.3 billion, a growth of 1% [5] - The average tangible equity return for the first half of 2024 is reported at 21.4%, while the adjusted figure excluding notable items is 17% [5] Future Projections - The company anticipates total revenue to reach $67.7 billion in 2024, with a modest growth rate of 2.5% [2] - The net profit attributable to ordinary shareholders is expected to grow to $22.9 billion in 2024, a 1.9% increase [2] - The EPS is projected to rise to $1.22 in 2024, while dividends per share are expected to increase to $0.81 [2]

Financial Performance - HSBC reported a pre-tax profit of $21.6 billion for the first half of 2024, consistent with the same period in 2023, despite a net profit decrease of $400 million, or 2%, to $17.7 billion[4]. - Total revenue increased to $37.3 billion, a rise of $400 million or 1% compared to the first half of 2023, driven by growth in wealth management and personal banking[5]. - The pre-tax profit for the first half of 2024 was $21,556 million, slightly down from $21,657 million in the previous year, indicating a decrease of 0.5%[12]. - The net profit after tax for the same period was $17,665 million, compared to $18,071 million in 2023, reflecting a decline of 2.2%[12]. - Revenue for the six months ended June 30, 2024, was $37,292 million, an increase from $36,876 million for the same period in 2023, representing a growth of 1.1%[12]. - The company reported a net profit of $17,665 million, down 2.2% from $18,071 million in the same period last year[35]. - The average return on tangible equity decreased to 21.4% from 22.4%, reflecting a decline in profitability metrics[10]. Operating Expenses and Costs - Operating expenses rose to $16.3 billion, an increase of $800 million or 5%, primarily due to higher technology spending and inflationary pressures[5]. - The cost-to-income ratio increased to 43.7% in 2024 from 41.9% in 2023, indicating a rise in operational costs relative to income[10]. - Operating expenses for the first half were $16.3 billion, an increase of about 5% compared to 2023, primarily due to rising technology costs and inflationary pressures[15]. - The cost growth guidance for 2024 is approximately 5% compared to 2023, with expected credit loss provisions projected to be between 30 to 40 basis points of average loans[8]. Credit Quality and Provisions - Expected credit loss provisions were $1.1 billion, down $300 million from the first half of 2023, indicating improved credit quality in various markets[5]. - Expected credit losses were $300 million, a decrease of $600 million, reflecting reduced provisions in the mainland China commercial real estate sector[6]. - The expected credit loss and other credit impairment charges decreased to $1,066 million from $1,345 million, showing a reduction of 20.7%[12]. - The company expects the average expected credit loss as a percentage of total loans to return to a mid-term range of 30 to 40 basis points in 2024[15]. Capital and Dividends - The common equity tier 1 capital ratio improved to 15%, up 20 basis points from Q4 2023, due to a reduction in risk-weighted assets[5]. - The board approved a second interim dividend of $0.10 per share and plans to initiate a share buyback of up to $3 billion, expected to be completed within three months[5]. - The company aims to maintain a common equity tier 1 capital ratio of 14% to 14.5% and a dividend payout ratio target of 50% for 2024, excluding significant items[8]. - The total dividends distributed to shareholders for the current year is $12,217 million, compared to $7,133 million in the previous year[54]. Customer and Market Activity - Customer loans stood at $938 billion, stable on a reported basis, with a $12 billion increase on a constant currency basis since December 31, 2023[5]. - Customer accounts increased by $24 billion on a reported basis and $27 billion on a constant currency basis compared to Q1 2024, with growth seen across all businesses, particularly in Asia[7]. - The number of new banking customers in Hong Kong reached 345,000, reflecting strong capital inflows[17]. - The international customer base in the UK increased by 8% to 2.7 million, indicating the unique position of the group's UK operations[17]. Legal Matters - HSBC is involved in multiple lawsuits in the UK and Luxembourg, with claims totaling up to $5.6 billion plus interest related to cash and securities recovery[68]. - Since 2014, HSBC has faced lawsuits in the US federal courts related to alleged violations of the Anti-Terrorism Act, with several cases still pending[69]. - HSBC was fined by the European Commission for anti-competitive behavior regarding Euro interest rate derivatives, with the fine amount still under appeal[70]. - HSBC has reached a settlement with plaintiffs in Israel regarding alleged misconduct related to foreign exchange, pending court approval[71]. Strategic Initiatives - HSBC's strategy includes ongoing market expansion and investment in new technologies to enhance customer service and operational efficiency[30]. - The company aims to maintain its leadership position in key markets, particularly in Hong Kong and the UK, with a focus on further growth opportunities[17]. - The bank announced a share buyback program worth up to $3 billion, expected to commence shortly and complete within three months[86]. Future Outlook - HSBC aims for an average return on tangible equity of approximately 15% by 2025[4]. - The bank targets an average tangible equity return of approximately 15% for 2024 and 2025, excluding significant items[8]. - HSBC anticipates releasing its earnings report for the three months ending September 30, 2024, on October 29, 2024[91].

Financial Performance - Pre-tax profit decreased by $200 million to $12.7 billion, reflecting a $4.8 billion gain from the sale of Canadian banking operations and an $1.1 billion impairment related to Argentine operations[13]. - Revenue increased to $20.8 billion, up $600 million or 3%, driven by increased customer activity in wealth management and global banking[13]. - HSBC reported a profit of $12.7 billion for Q1 2024, enabling the company to continue returning value to shareholders[19]. - The company announced a total distribution of $8.8 billion, including a regular dividend of $0.10 per share and a special dividend of $0.21 per share from the sale of its Canadian business[19]. - The profit attributable to shareholders for the quarter ending March 31, 2024, is $10,584 million, a decrease from $10,745 million in the same period last year[33]. - The basic earnings per share for the quarter is $0.54, compared to $0.52 in the previous year[33]. - The adjusted profit attributable to ordinary shareholders, excluding significant items, is $6,326 million, up from $4,747 million year-over-year[33]. - The company reported a total off-balance sheet nominal amount of $651,879 million, down from $678,024 million, indicating a decrease of about 3.9%[35]. - The company reported a significant gain of $4.8 billion from the sale of its Canadian banking business, which included various foreign exchange hedging gains[168]. Credit Losses and Provisions - Expected credit losses were $700 million, an increase of $300 million compared to Q1 2023, with an annualized rate of 30 basis points of total customer loans[13]. - The expected credit loss (ECL) for retail is projected at $2.9 billion and for wholesale at $2.3 billion, totaling $5.2 billion[23]. - The expected credit loss total as of December 31, 2023, was $3.0 billion for retail and $2.5 billion for wholesale, reflecting the impact of geopolitical risks and macroeconomic conditions[24]. - The expected credit loss provision was $11,483 million, reflecting a decrease of 29 million[37]. - The expected credit loss provisions for customer and interbank loans were $47 million as of March 31, 2024, compared to $303 million as of December 31, 2023, showing a substantial reduction[35]. - The expected credit loss charge for the first three months of 2024 is $0.7 billion, compared to $0.4 billion in Q1 2023[62]. - The expected credit loss provisions rose to $700 million, an increase of $300 million compared to Q1 2023[137]. - The expected credit loss sensitivity analysis indicates a cautious outlook for the upcoming quarters, with various scenarios considered[58]. Operating Expenses - Operating expenses rose to $8.2 billion, an increase of $600 million or 7%, attributed to continued investment in technology and inflation effects[13]. - The total operating expenses for Q1 2024 were $(8,151) million, a decrease of 6% from $(8,645) million in Q4 2023[86]. - Operating expenses for Q1 2024 were $3,700 million, up 7% year-over-year[129]. - Operating expenses totaled $(7,586) million, which is an increase from $(3,084) million in the same quarter last year[176]. Capital and Shareholder Returns - Common equity tier 1 capital ratio improved to 15.2%, up 40 basis points from Q4 2023, influenced by capital generation and strategic transactions[13]. - The company plans to initiate a share buyback of up to $3 billion, expected to impact the common equity tier 1 capital ratio by 40 basis points[13]. - The board declared a regular dividend of $0.10 per ordinary share and a special dividend of $0.21 per ordinary share, to be paid in June 2024[84]. - The target dividend payout ratio for 2024 is set at 50%, calculated based on earnings per share excluding significant items[91]. - The company does not account for significant items when calculating the dividend payout ratio target[91]. Business Segments and Revenue - The wealth management business had a balance of $1.8 trillion, a 10% increase compared to the same period last year, with net new investment assets of $27 billion in the first three months of 2024[16]. - The trading banking segment generated $6.7 billion in revenue, a 1% increase from Q1 2023, driven by growth in commercial banking and global banking and markets[16]. - The wealth management and personal banking segment generated revenue of $7,164 million, compared to $4,253 million in the previous year[79]. - The commercial banking segment reported revenue of $5,532 million, up from $5,095 million year-over-year[79]. - The global banking and markets segment achieved revenue of $4,455 million, an increase from $3,666 million in the previous year[79]. Economic Outlook and Market Conditions - The company anticipates that GDP growth in North America and Europe will slow in 2024 compared to 2023 due to the delayed effects of interest rate hikes and inflation[29]. - The company expects a slowdown in GDP growth in Hong Kong and mainland China for 2024 due to declining property markets and weak global trade growth[30]. - Inflation in major markets is expected to continue to ease, allowing central banks to begin lowering policy interest rates from mid-2024[30]. - The company is focused on maintaining a robust credit risk model to estimate future credit losses, incorporating various economic scenarios[29]. - The geopolitical tensions, including the ongoing Russia-Ukraine conflict and escalating Middle East situations, continue to pose significant uncertainties for HSBC's operations and risk profile[60]. Strategic Initiatives and Sales - HSBC completed the sale of its Canadian business and reached an agreement to sell its Argentine operations, focusing on high-value international opportunities[19]. - The company plans to sell its Argentine business, with related customer accounts of $1 billion classified as "assets held for sale"[150]. - The company completed the sale of its Canadian banking operations to Royal Bank of Canada, resulting in a gain of $4.8 billion, which includes a reversal of $600 million in currency translation reserve losses and $400 million in other reserve losses[71]. - The sale of the French retail banking business to Promontoria MMB SAS generated a profit participation interest of €100 million ($100 million) for HSBC, with an estimated after-tax loss impact of €100 million ($100 million) from retained loans[70].

Financial Performance - HSBC reported a financial performance with a net profit of $16 billion for 2023, an increase of 30% compared to the previous year[10]. - The bank's return on equity (ROE) improved to 12.5%, up from 9.5% in 2022[10]. - Total revenue reached $40 billion, reflecting a growth of 15% year-over-year[10]. - The group achieved a revenue of 840 billion in 2023, with 470 billion coming from Asia, representing a 34.1% increase in high-tier customer members compared to 2022[23]. - The group reported a return on equity of 14.6%, up from 10.0% in 2022[24]. - The company’s return on equity for 2023 was 14.6%, with a reported return of 15.6% after strategic adjustments[65]. - The overall financial performance in 2023 improved, reflecting the effectiveness of the company's strategies and asset management[64]. - The company reported a benchmark revenue of 303 billion, an increase of 133 billion compared to 2022[84]. - Net income increased by 54 billion, leading to a benchmark revenue of 154 billion, representing a growth rate of 30%[86]. Customer Engagement and Satisfaction - The bank's customer deposits increased by 8% to $1.5 trillion, indicating strong customer confidence[10]. - Customer satisfaction improved significantly, with the company doubling its ranking in the industry[27]. - The total customer base using HSBC services reached 2,944 billion, an increase from 2,107 billion in 2022[23]. - The company processed approximately $500 billion in cross-border payments in 2023, indicating strong market positioning[70]. - The wealth management and personal banking business added over 100,000 new clients in 2023[78]. - 83% of customers utilized digital services, marking a 5 percentage point increase since 2022[97]. - 75% of international clients in wealth management and personal banking opened accounts digitally, reflecting a 30 percentage point increase since 2022[97]. Strategic Initiatives and Expansion - HSBC plans to expand its operations in Asia, targeting a 20% increase in market share by 2025[10]. - The company plans to expand its banking operations in France, with expectations to launch in early 2024[14]. - The company is focusing on expanding its wealth management strategy, particularly in mainland China and the UK banking sector[43]. - The company plans to maintain a strong presence in the Southeast Asian market, leveraging favorable economic conditions[1]. - The company is actively exploring artificial intelligence applications to adapt to significant changes in the financial landscape[62]. - The company is focused on expanding its digital banking services, with 54% of wealth management and personal banking clients actively using mobile services, a 6 percentage point increase since 2022[97]. Sustainability and ESG Commitment - HSBC is focusing on sustainable finance, with a target to provide $100 billion in green financing by 2030[10]. - The company achieved a net zero carbon emissions goal with a sustainable financing amount of $2.583 billion and $361 million related to social activities as of December 31, 2023[27]. - The company aims to achieve a 35% reduction in emissions by 2025 as part of its net zero carbon emissions plan[27]. - The company aims to achieve net zero carbon emissions in its operations and supply chain by 2030, and for its financing projects by 2050[51]. - The company is committed to addressing human rights risks and ensuring all employees have access to digital tools[27]. - The company is committed to providing inclusive banking services and has implemented measures to support clients in understanding their financial options[104]. - The company has established a comprehensive ESG reporting framework to detail actions taken towards its sustainability goals[103]. Operational Efficiency - HSBC's cost-to-income ratio improved to 52%, down from 55% in the previous year, demonstrating operational efficiency[10]. - The company is focusing on enhancing operational efficiency and increasing employee compensation as part of its 2024 business plan[14]. - The cost target for 2024 is set, excluding significant items and reflecting a baseline of 30 to 40 basis points[13]. - The baseline cost of funds decreased by 2% year-on-year, contributing to improved performance metrics[70]. - The company is actively identifying new strategies to enhance capital management and operational efficiency[1]. Shareholder Returns - The bank has set a dividend payout ratio of 50% for 2024, aiming to return more capital to shareholders[10]. - The total dividend for 2023 is expected to reach $0.61 per share, the highest level since 2008, with a payout ratio of 14.8%[70]. - The company has initiated a share buyback program, targeting up to 20% of its capital[13]. - The company returned a total of 190 billion to shareholders through dividends and share buybacks in 2023[84]. Employee Engagement and Development - The company has a workforce of 221,000 employees worldwide[32]. - Employee engagement improved, with a rise of 11 percentage points in 2023 compared to 2020, exceeding the financial services industry benchmark[89]. - 91% of employees reported being able to balance their work commitments, with 62% choosing flexible work arrangements[175]. - The company aims to enhance employee engagement and performance, with 81% of employees expressing confidence in the company, a 4 percentage point increase since 2022[98]. - The company has set a target to achieve 35% representation of senior management roles by 2025, with 34.1% currently held by women[98]. Governance and Compliance - The board of directors has undergone significant changes, enhancing governance and oversight capabilities[1]. - The board has established a governance committee to ensure effective oversight of its governance practices[191]. - The board continues to engage with key stakeholders and has made decisions in line with the requirements of the Companies Act 2006[166]. - The board has prioritized understanding the impact of regulatory changes on the group's strategy and operations[170].

Investment Rating - The investment rating for the company is "Add" [2] Core Views - The company aims for an average tangible equity return of approximately 15% in 2024, with a projected net interest income of at least $41 billion for the banking business in 2024. The target payout ratio for 2024 is maintained at 50%, and the company has announced a share buyback of up to $2 billion [2][3] Financial Performance Summary - For the fiscal year 2023, the total operating income reached $66.1 billion, representing a year-on-year growth of 30.5%. The attributable net profit for ordinary shareholders was $22.4 billion, with a year-on-year increase of 56.4% [2][3] - The net interest margin improved to 1.66%, an increase of 24 basis points year-on-year. The company’s pre-tax profit rose by $13.8 billion to $30.3 billion, while the post-tax profit increased by $8.3 billion to $24.6 billion [3] - The average tangible equity return increased from 10.0% in 2022 to 14.6% in 2023. The liquidity coverage ratio stood at 136%, total capital ratio at 20.0%, and leverage ratio at 5.6% [3] 2024 Outlook - The company maintains a cautious outlook for loan growth in the first half of 2024 but expects a mid-single-digit percentage increase in customer loans year-on-year in the medium to long term. The anticipated credit loss provisions are expected to average around 40 basis points of total loans [3][2] - The company targets a cost increase of approximately 5% for 2024, excluding the impact of the sale of the French retail banking business and the planned sale of the Canadian banking business [3]

Financial Performance - HSBC Holdings reported a record profit of $30.3 billion for 2023, an increase of $13.3 billion compared to the previous year, driven by revenue growth and strategic transactions[4]. - Total revenue increased by $15.4 billion to $66.1 billion, representing a 30% growth, with net interest income rising by $5.4 billion due to higher interest rates[4]. - The reported pre-tax profit for 2023 is $30,348 million, a significant increase from $17,058 million in 2022, representing an increase of 78.3%[15]. - The profit attributable to ordinary shareholders was $22,432 million, up from $14,346 million in 2022, marking a growth of 56.5%[32]. - The company reported a net profit of $24,559 million for 2023, compared to $16,249 million in 2022, which is a 51% increase[54]. - The total comprehensive income for 2023 was $29,542 million, a significant recovery from a loss of $993 million in 2022[54]. - The basic earnings per share (EPS) rose to $1.15 in 2023, compared to $0.72 in 2022, reflecting a growth of 59.7%[15]. - The average return on common equity improved to 13.6% in 2023, compared to 9.0% in 2022, indicating stronger profitability relative to equity[15]. Capital and Dividends - The Common Equity Tier 1 capital ratio improved to 14.8%, an increase of 60 basis points, despite dividend payments and share buybacks[4]. - The board approved a fourth interim dividend of $0.31 per share, totaling $0.61 per share for 2023, and announced a share buyback program of up to $2 billion[4]. - The dividend payout ratio for 2023 is 50%, up from 44% in 2022, reflecting a commitment to returning value to shareholders[15]. - Total dividends paid to shareholders increased to $11,593 million in 2023 from $6,544 million in 2022, representing a growth of 77.5%[85]. - The total dividend per share for 2023 was $0.53, significantly higher than $0.27 in 2022, marking a 96.3% increase[85]. Customer and Loan Growth - Customer loans increased by $15 billion, while customer accounts rose by $41 billion, mainly driven by growth in wealth management and personal banking in Asia[4]. - Customer loans (net) amounted to $938,535 million, slightly up from $923,561 million in 2022, indicating stable loan growth[15]. - The total customer accounts reached $1,611,647 million, up from $1,570,303 million in 2022, an increase of 2.6%[32]. - The company anticipates mid-single-digit percentage growth in customer loans year-over-year in the medium to long term, despite cautious outlook for the first half of 2024[10]. Operating Efficiency - Operating expenses decreased by $600 million to $32.1 billion, a 2% reduction, primarily due to the end of a cost-saving program[4]. - The cost-to-income ratio improved to 48.5% in 2023, down from 64.6% in 2022, showcasing better operational efficiency[15]. - The total operating expenses for 2023 were $32,070 million, a slight decrease from $32,701 million in 2022[52]. Credit Losses and Provisions - Expected credit losses decreased by $1 billion to $3.4 billion, representing 33 basis points of average loans, influenced by economic uncertainties and inflation pressures[4]. - Expected credit loss provisions are projected to average about 40 basis points of total loans for 2024, with a return to normal levels of 30 to 40 basis points in the medium to long term[10]. - Expected credit losses and other credit impairment charges totaled $3,447 million, compared to $3,630 million in the previous year, reflecting a decrease of about 5.0%[50]. Strategic Initiatives and Acquisitions - HSBC completed the acquisition of Silicon Valley Bank UK, contributing an estimated $1.6 billion to pre-tax profit[4]. - The company plans to continue expanding its market presence and investing in new technologies to enhance customer service and operational efficiency[4]. - Following the sale of its French retail banking business, the company is focusing on investing in business development, including the acquisition of Citigroup's retail wealth management business in mainland China[62]. Market Outlook and Economic Conditions - The company anticipates challenges in the market environment, particularly due to conflicts in Europe and the Middle East, which may lead to economic volatility[66]. - The economic outlook for 2024 remains cautiously optimistic, with expectations of a slowdown in growth during the first half, followed by a recovery[76]. - HSBC's financial performance improved in 2023, with enhanced shareholder returns reflecting the collective efforts of all employees[76]. Legal and Regulatory Matters - HSBC is involved in multiple ongoing legal cases related to alleged anti-competitive behavior in foreign exchange and precious metals markets, with potential damages in Canada amounting to CAD 1 billion plus CAD 250 million in punitive damages[97]. - Ongoing investigations by global tax authorities may lead to substantial financial impacts for HSBC, although specific outcomes are currently unpredictable[98]. - HSBC is facing a collective lawsuit in Canada regarding price manipulation of silver and gold, with claims totaling CAD 1 billion[97]. Risk Management and Governance - The Group Risk Management Committee oversees internal controls and risk management systems, excluding financial reporting controls[141]. - HSBC has complied with the corporate governance codes in both the UK and Hong Kong throughout 2023[141]. - The establishment of the Technology Committee will lead to the formal dissolution of the Technology Governance Working Group on March 1, 2024[141].