HSBC growth picks up but outlook is muted

Reported pretax profit rose by $1.3bn to $2.7bn in the three months to the end of December as revenue rose 2% to $12bn and costs fell. The results showed a doubling in the rate of revenue growth from the previous quarter driven by commercial lending.

HSBC's annual profit more than doubled as lower bad debts more than made up for reduced revenue at Britain's biggest bank. Pretax profit rose to $18.9bn from $8.8bn as revenue dipped 2% to $49.6bn.

The FTSE 100 lender released $0.9bn of bad debt charges during 2021 after setting aside $8.8bn a year earlier because of the pandemic. HSBC took a $0.5bn bad debt charge in the fourth quarter including an increased provision for Chinese real estate assets.

The bank declared a second interim dividend of $0.18 cents a share, taking the annual payout to $0.25 cents - up from $0.15 cents a year earlier but less than the $0.30 cents in 2019. HSBC also said it would buy back $1bn of shares when the current $2bn buyback ends but the new target disappointed some analysts.

The net interest margin was squeezed by 12 basis points in 2021 to 1.2% but the bank said the measure stabilised in the second half. HSBC said the prospects for net interest income had improved with rising interest rates and that it was on track to achieve 10% return on tangible equity in 2023, a year earlier than planned.

Noel Quinn, HSBC's chief executive, said: "We made good progress against our strategy in 2021, which contributed to a strong financial performance that was supported by the global economic recovery. All of our regions were profitable and we saw growth in the fourth quarter of 2021 in many of our business lines.

"We have good momentum coming into 2022 and are confident that we can continue to execute against our strategy. We also remain cognisant of the potential impact that further Covid-19-related uncertainty and continued inflation might have on us and our clients."

HSBC shares fell 0.4% to 544.50p at 10:48 GMT as the global bank reported the results against the backdrop of the intensifying Ukraine crisis. The shares have gained 26% in the past year.

AJ Bell investment director Russ Mould said: "HSBC’s results are a real mixed bag. Commercial banking is doing well, and its returns target might be achieved a year ahead of plan.

“However, there are some headwinds in its core territory of Asia including uncertainty around China’s property market, and the share buyback scheme has only been extended by up to $1bn, much less than some analysts had expected.

“Inflation around the world is causing problems for consumers and businesses - which are HSBC's end markets. Fears there could be more pain in the Chinese property sector also clouds its outlook."