HSBC registers higher revenues from Global FX in GBM in 2022
HSBC Holdings plc today posted its annual results for 2022.
Reported profit before tax fell by $1.4bn to $17.5 billion in 2022. The result included an impairment on the planned sale of HSBC’s retail banking operations in France of $2.4 billion. Adjusted profit before tax increased by $3.4 billion to $24.0 billion.
Reported profit after tax increased by $2 billion to $16.7 billion, including a $2.2 billion credit arising from the recognition of a deferred tax asset.
Reported revenue increased by 4% to $51.7 billion, driven by strong growth in net interest income, with increases in all of HSBC’s global businesses, and higher revenue from Global Foreign Exchange in Global Banking and Markets (GBM).
This was in part offset by a $3.1 billion adverse impact of foreign currency translation differences, the impairment on the planned sale of our retail banking operations in France and adverse movements in market impacts in insurance manufacturing in Wealth and Personal Banking (‘WPB‘). In addition, fee income fell in both WPB and GBM. Adjusted revenue increased by 18% to $55.3 billion.
Net interest margin (NIM) of 1.48% increased by 28 basis points (‘bps’), reflecting interest rate rises.
The Board has approved a second interim dividend of $0.23 per share, making a total for 2022 of $0.32 per share.
HSBC’s revenue outlook remains positive. Based on the current market consensus for global central bank rates, the company expects net interest income of at least $36 billion in 2023. HSBC intends to update its net interest income guidance at or before its first quarter results to incorporate the expected impact of IFRS 17 ‘Insurance Contracts’.
HSBC retains its focus on cost discipline and will target 2023 adjusted cost growth of approximately 3% on an IFRS 4 basis. This includes up to $300 million of severance costs in 2023, which HSBC expects to generate further efficiencies into 2024. There may also be an incremental adverse impact from retranslating the 2022 results of hyperinflationary economies at constant currency.
Given the current returns trajectory, HSBC is establishing a dividend payout ratio of 50% for 2023 and 2024, excluding material significant items, with consideration of buy-backs brought forward to the first quarter results in May 2023, subject to appropriate capital levels. HSBC also intends to revert to paying quarterly dividends from the first quarter of 2023.
Subject to the completion of the sale of HSBC’s banking business in Canada, the Board’s intention is to consider the payment of a special dividend of $0.21 per share as a priority use of the proceeds generated by completion of the transaction. A decision in relation to any potential dividend would be made following the completion of the transaction, currently expected in late 2023, with payment following in early 2024.