2022-10-25 04:00Financial Performance - HSBC Holdings plc reported a net profit of $2.6 billion for Q3 2022, a decrease of $1.7 billion compared to Q3 2021, primarily due to a $2.4 billion impairment related to the planned sale of its French retail banking business[2]. - The adjusted pre-tax profit for Q3 2022 increased by $1 billion to $6.5 billion, reflecting strong growth in net interest income driven by rising interest rates[2]. - The total revenue for the first nine months of 2022 was $36.9 billion, a decrease of 2% year-over-year, impacted by unfavorable currency translation effects[2]. - Total revenue for Q3 2022 was $36,852 million, a decrease of 1.9% compared to $37,563 million in Q3 2021[4]. - Adjusted pre-tax profit for Q3 2022 was $17,182 million, up from $17,046 million in Q3 2021, reflecting a growth of 0.8%[5]. - Net profit for the nine months ended September 30, 2022, was $11,776 million, compared to $12,664 million in the same period of 2021, reflecting a decline of 7.0%[16]. - The company reported a total of $2,676,167 million in financial guarantees as of December 31, 2021, with a second-level credit risk coverage of 22.1%[76]. Revenue and Income Sources - HSBC's adjusted revenue for the first nine months of 2022 increased by 11% to $40 billion, driven by growth in net interest income across all global businesses[2]. - Adjusted revenue for Global Business reached $39,993 million for the nine months ended September 30, 2022, compared to $35,931 million in the same period of 2021, representing an increase of 5.9%[17]. - Wealth Management and Personal Banking segment generated adjusted revenue of $17,208 million, up from $16,017 million year-over-year, reflecting a growth of 7.4%[17]. - Commercial Banking adjusted revenue increased to $11,526 million from $9,436 million, marking a significant rise of 20.0%[17]. - Global Banking and Markets segment reported adjusted revenue of $11,664 million, compared to $10,803 million, an increase of 8.0%[17]. Interest Income and Margins - The net interest margin improved to 1.57%, an increase of 38 basis points year-over-year and 22 basis points quarter-over-quarter[2]. - HSBC expects net interest income for 2022 to reach $32 billion, with a forecast of at least $36 billion for 2023, reflecting the impact of currency depreciation and rising funding costs[2]. - Net interest income was $23.0 billion for the first nine months of 2022, compared to $19.7 billion in the same period of 2021, reflecting an increase in net interest margin to 1.39%[41]. Credit Losses and Provisions - The expected credit loss charge for 2022 is projected to be around 30 basis points of average loans, influenced by macroeconomic factors such as inflation and economic uncertainty[2]. - The expected credit loss for Q3 2022 was a net provision of $1.075 billion, compared to a net reversal of $659 million in Q3 2021, reflecting increased economic uncertainty[22]. - Adjusted expected credit losses for the first nine months were $900 million, compared to a $200 million reversal in the same period of 2021[55]. - The expected credit loss provision for customer loans was $10,433 million, indicating a coverage ratio of 1.1%[75]. Capital and Equity - The common equity tier 1 capital ratio stood at 13.4%, down 20 basis points from Q2 2022, impacted by the reclassification of the French retail banking business[2]. - The total capital ratio was 18.1% as of September 30, 2022, compared to 18.6% as of June 30, 2022[5]. - The total equity attributable to shareholders was $177.659 billion, down from $188.382 billion as of June 30, 2022[48]. - The average return on common equity (ROE) was 8.0% for the nine months ended September 30, 2022, compared to 8.2% in the previous year[16]. Operational Efficiency and Expenses - The adjusted operating expenses for 2022 are expected to be controlled at a level similar to 2021, with a target increase of about 2% for 2023[2]. - The cost-to-income ratio improved to 66.2% from 66.8% year-over-year, indicating better operational efficiency[16]. - The total operating expenses for Q3 2022 remained stable at $7.975 billion, with cost-saving measures offsetting increases due to technology investments[22]. - The company continues to maintain strict cost discipline, targeting a 2% increase in adjusted costs for 2023 compared to 2022[39]. Strategic Initiatives and Future Outlook - HSBC aims to achieve a return on tangible equity of at least 12% starting in 2023, with a target payout ratio of 50% for 2023 and 2024[2]. - The company is exploring the potential sale of its entire stake in HSBC Canada, with no decisions made yet[9]. - HSBC plans to sell its French retail banking business, resulting in a $2.4 billion impairment, with the sale expected to be completed in the second half of 2023[9]. - The company is set to announce a climate transition plan in 2023, detailing its climate strategy and science-based targets for 2030 and 2050[9]. Economic and Market Conditions - HSBC's global economic environment has been negatively impacted by inflation and rising interest rates due to the ongoing effects of the Russia-Ukraine war and the COVID-19 pandemic[9]. - The company is closely monitoring the impact of recent UK economic policies on the British pound and government securities yields, which adds uncertainty to future interest rate movements[9]. - Geopolitical risks from the ongoing Russia-Ukraine war have led to significant sanctions and trade restrictions, impacting financial institutions and businesses globally[68]. - The ongoing COVID-19 pandemic continues to pose risks to economic activity in mainland China, affecting the broader Asian tourism sector and global supply chains[69]. Sustainability and Climate Goals - HSBC is committed to achieving net-zero carbon emissions in its operations and supply chain by 2030, and for its customer portfolio by 2050[70]. - The company is enhancing its climate risk management capabilities and integrating climate risk factors into its governance processes[70]. - HSBC's commitment to reducing financing emissions in oil, gas, and utility sectors is part of its broader climate strategy, which may face challenges due to evolving regulatory expectations[133].