HSBC rewards shareholders with buyback, dividend as profit triples

HONG KONG – HSBC Holdings said on Tuesday its profit tripled in the first quarter, beating expectations, as rising interest rates boosted the lender’s income and helped it pay its first quarterly dividend since 2019.

The strong results of HSBC and Asian rival DBS Bank underscore the boost to their balance sheets from aggressive policy tightening, even though it has brought banking sector turmoil, chiefly in the United States.

On Monday, regulators seized First Republic Bank and sold its assets to JPMorgan Chase & Co in a deal to resolve the largest US bank failure since the 2008 financial crisis and draw a line under the bank sector jitters.

With the rate cycle nearing a peak, the challenge for the likes of HSBC, Europe’s largest bank, and DBS will be to sustain their margins in 2023 and beyond.

HSBC chief executive Noel Quinn said the results showed the bank’s strengths in a rising rate environment, and played down the risks of further contagion for the banking sector.

“We do not believe there is a global banking crisis on the horizon. We do not see a negative impact on our business” as a consequence of First Republic Bank’s rescue, Mr Quinn told a conference call.

HSBC posted a pre-tax profit of US$12.9 billion (S$17.6 billion) for the quarter ended March, versus US$4.2 billion a year earlier. The profit was much higher than the US$8.64 billion average estimate of analysts compiled by the bank.

Hong Kong shares of HSBC rose 3.3 per cent in afternoon trading.

HSBC’s headline profit was boosted by a reversal of a US$2 billion impairment it took against the planned sale of its French business, reflecting the fact that the deal may not go through. It had warned in April that its France disposal could be in jeopardy over regulatory capital concerns for the buyer.

The London-headquartered bank also reported a delay in the timeframe for the completion of the sale of its Canada business, a key part of its strategy to shrink in slow-growing Western markets where it lacks scale.

The bank said the planned US$10 billion sale, originally slated to be completed by the end of 2023, will now likely go through only in the first quarter of 2024.

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