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HSBC full-year profits surge fuelled by high interest rates

Branch of HSBC bank on 15th January 2024 in London, United Kingdom. HSBC Bank plc is a British multinational banking and financial services organisation. HSBCs international network comprises around 7,500 offices in over 80 countries globally. (photo by Mike Kemp/In Pictures via Getty Images)
HSBC has reported a massive jump in profits. (Mike Kemp via Getty Images)

HSBC, has reported an almost 80% jump in its pre-tax profit which rose to $30.35bn (£24bn) in 2023, driven by high interest rates.

Europe's largest bank, however, missed forecasts due to a $3bn (£2.3bn) impairment from its stake in a Chinese bank, the Bank of Communications.

Read more: Falling interest rates give Jeremy Hunt £23bn headroom to cut taxes

The bank’s 2023 pretax profit jumped 78% to $30.35bn, while net profit rose 56% to $22.43bn. The steep rise in full-year earnings prompted the bank to announce fresh share buybacks of up to $2bn.

The London-headquartered bank also announced a fourth interim dividend of $0.31 per share, resulting in a total for 2023 of $0.61 per share.

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“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 $7bn, and a further share buy-back of up to” $2bn, group chief executive Noel Quinn said.

Read more: Barclays to return £10bn to shareholders despite profit drop

In addition to three share buybacks totalling $7bn, Quinn said the bank returned $19bn to shareholders last year.

However, HSBC's fourth-quarter profit fell 80% after taking unexpected charges on holdings in a Chinese bank and from selling its French retail operations. Pretax profit fell to $1bn in the final three months of last year from $5.05bn in the year-earlier period. The lender took a $3bn charge on its holding in Bank of Communications Co. and $2bn on its French sale.

The bank makes most of its profits in Asia, especially in China and Hong Kong.

Its annual report also showed that HSBC paid its top investment bankers an average bonus of $771,700 last year, an increase of 15%. It also nearly doubled the pay packet for its chief executive, Noel Quinn.

The lender disclosed that it had settled on a $10.6m (£8.4m) package for Quinn, a significant increase from the $5.6m he received for 2022, thanks to a long-term bonus in HSBC shares worth more than $5m.

The bank also increased its overall bonus pool for staff by 12% to $3.8m.

Watch: HSBC achieves record profits but sweats on China woes

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