HSBC Holdings PLC reported a significant increase in net profit for the third quarter, driven by higher interest rates and a surge in non-interest income. The bank, headquartered in London and with a focus on Asia, announced a net profit of $5.62 billion for the three-month period ending on September 30, compared to $2.00 billion in the same period last year. Pretax profit, which is HSBC’s preferred profit measure, also rose to $7.71 billion from $3.23 billion.
Revenue Growth and Factors Behind It
HSBC experienced a substantial 40% growth in quarterly revenue compared to the previous year, reaching $16.2 billion. This growth was primarily attributed to the higher interest rate environment, which supported an increase in net interest income across all of HSBC’s global businesses. Additionally, higher non-interest income played a significant role in driving revenue growth, with a 97% increase year-on-year to $6.9 billion. This increase was mainly driven by the sale of its retail banking operations in France.
Net Interest Income and Margin
Net interest income, HSBC’s main source of revenue, reached $9.25 billion for the quarter, up from $8.01 billion in the same period last year. Furthermore, the net interest margin increased by 19 basis points to 1.70% compared to the previous year.
Future Outlook and Dividends
HSBC’s Chief Executive, Noel Quinn, expressed confidence in the bank’s financial performance and stated that they are on track to achieve their mid-teens return on tangible equity target by 2023. The bank reaffirmed its guidance for net interest income to exceed $35 billion in 2023.
In terms of dividends, HSBC’s board approved a third interim dividend of $0.10 per share. Additionally, the bank intends to initiate a further share buyback of up to $3 billion after announcing three share buybacks in 2023, totaling up to $7 billion.
Overall, HSBC’s strong financial performance in the third quarter reflects the positive impact of higher interest rates and non-interest income. The bank remains focused on achieving its financial targets and delivering value to its shareholders.