HSBC Holdings plc (LON:HSBA) has released their 4th quarter and full year 2022 financial results this morning. The bank saw full year profits dip by 7% due to one-off charges, but the 4th quarter result was almost double that of a year ago.
HSBC is continuing to refocus towards Asia, and the key industrial and commercial regions of China in particular. To that end, HSBC is in the process of selling its French and Canadian operations, leading to those one-off charges.
Q4 2022 hedge fund letters, conferences and more
The underlying performance of the group was stronger, with adjusted profits rising by $3.4bn to $24.0bn. Net interest margins rose strongly to 148bps as the group recorded revenue increases across all of its global businesses.
The group incurred bad debt costs of $3.6bn, but these were largely offset by the release of provisions taken to recognise the potential impact of Covid upon loans made, now that the pandemic has eased.
HSBC see an improving global outlook and expect to achieve their target of earning a 12% return on equity from this year onwards. The final dividend of USD23c takes the full year total to USD32c.
The bank has announced a policy for this year and next of paying out half of its earnings in shareholder dividends. In addition, a special dividend of USD21c is expected to be announced later this year, reflecting the receipt of proceeds from the sale of the Canadian operations.
HSBC's Earnings
Steve Clayton, head of equity funds, Hargreaves Lansdown:
“The numbers themselves are strong compared to market expectations but the market was hoping for a little more good news in the outlook statement, so the shares are down by around 1% this morning.
The business is performing well, but much depends on the group maintaining robust cost controls. That means more branch closures in the UK this year, with another 130 set to close. But for shareholders, that intention to pay out half of earnings suggests an ongoing yield from HSBC shares of perhaps as much as 7% this year and next, with that extra USD21c special dividend on top.
HSBC represents one of the most direct routes of investing into the reopening of the Chinese economy. Whilst that remains on track, we would expect to see continuing encouraging trading news coming from the bank.
