2024-07-31 04:00Financial 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].