May 8, 2024

HSBC 1Q 2024 Earnings Summary

HSBC released its first quarter earnings report for 2024 on 30th April. During this period, HSBC completed the sale of its Canada business and agreed to sell its Argentina business. These actions allowed HSBC to focus on markets with higher-value international opportunities.

Financial Performance

  • Revenue increased by $0.6 bn (3%) to $20.8 bn. Profit before tax decreased by $0.3bn to $12.7bn. Reported profit after tax fell 1.8% YoY to $10.8bn. Revenue was relatively stable and benefited from the disposal of the banking business, reflecting the non-recurrence of fair value gains from the sale proceeds.
  • Common equity tier 1 (‘CET1’) capital ratio of 15.2% increased by 0.4 percentage points compared with 4Q23, driven by capital generation, the net beneficial impact of strategic transactions on CET1 and risk-weighted assets (‘RWAs’).
  • Liquidity coverage ratio (‘LCR’) was 136% on 31 March 2024, remain unchanged from 31 Dec 2023.
  • Net interest margin (‘NIM’) of 1.63% decreased by 6 basis points (‘bps’) compared with 1Q23. NIM increased by 11bps compared with 4Q23, reflecting the impact of hyperinflation and currency devaluation in Argentina, partly offset by higher funding costs of liabilities.
  • Operating expenses of $8.2bn were $0.6bn or 7% higher than in 1Q23. The growth was primarily due to continued investment in technology, the impacts of inflation and a higher performance-related pay accrual which reflected a change in the expected quarterly phasing of the performance-related pay pool relative to 1Q23.
  • HSBC guidance remains unchanged, with Return on average tangible equity (‘RoTE’) at 26.1% YoY (down slightly from 27.4%).
  • HSBC will continue its shareholder-friendly activities (share buybacks and dividends). The board has approved a first interim dividend of $0.10 per share and initiated a share buy-back of up to $3 bn.

Given the solid financial performance, HSBC is well-positioned to sustain its practice of rewarding both shareholders and debtholders. We have selected some bonds across different capital tiers accordingly. Indicative pricing as of 8th May on example bonds: