HSBC profits rise but fail to meet high expectations

Months of high interest rates worldwide have helped Europe's biggest bank record an almost 80 percent rise in pre-tax profits, but the figure was not as high as expected.

A week after rival NatWest recorded its highest figures since the financial crisis of 2008, HSBC posted a pre-tax profit for 2023 of $30.3 billion, which was short of the anticipated figure of $34.1 billion.

Much of the company's business is from its dealings in Asia, but economic conditions there took the edge off the profits.

"Our record profit performance in 2023 enabled us to reward our shareholders with our highest full-year dividend since 2008, three share buy-backs last year totaling $7 billion, and a further share buy-back of up to $2 billion," said HSBC Chief Executive Noel Quinn.

"This reflected four years of hard work and the strength of our balance sheet in a higher interest rate environment," he said.

Despite the jump in profits, their failure to meet expectations was reflected in HSBC's share price when business opened at the London Stock Exchange on Wednesday, with shares dropping by almost 8 percent, wiping out gains accumulated during the last 12 months.

The Guardian newspaper reported that this meant the company was on course for its biggest daily share price slide since the early days of the pandemic, in April 2020.

Richard Hunter, head of markets at investment company Interactive Investor, warned that the likely reduction of global interest rates, after such a long period of being so high, "could remove a plank from a core growth area of late, while the rather messy performance in the fourth quarter could potentially lead to some rather more negative momentum".

Neil Shah, executive director of content and strategy at Edison Group, told Sky News that other banks, including Standard Chartered, had also taken a hit because of economic challenges in Asian markets.