HSBC Holdings profit drops 46%, amid impairment charges, more provisions for bad debts


By Clarence Leong

HSBC Holdings PLC’s third-quarter net profit fell 46% from a year earlier as the bank recorded impairment charges for the divestiture of its retail banking business in France and an increase in credit provisions .

The Asia-focused lender (HSBA.LN) reported net profit of $1.91 billion for the three months ending September 30, compared with $3.54 billion for the year-ago period, he said on Tuesday.

Net operating income fell 3.2% to $11.62 billion, despite a 30% increase in net interest income to $8.58 billion, higher interest rates l scale that boosted lending revenue. The lender said the decline was due to impairment from the planned divestiture of its banking business in France and “adverse foreign currency translation impacts”.

HSBC has made more provisions for bad debts, reporting expected credit losses of $1.1 billion for the quarter, which reflect “heightened economic uncertainty, inflation, rising interest rates and ongoing developments in the commercial real estate sector in mainland China,” he said. This compares to a net release of $659 million in the same period last year.

The bank raised its net interest income forecast for 2022 to $32 billion from at least $31 billion previously. But for 2023, it now expects net interest income of at least $36 billion, down from its previous forecast of at least $37 billion, in part due to weakening of the pound sterling against the greenback.

“We have maintained tight cost control, despite inflationary pressures, and remain on track to meet our cost targets for 2022 and 2023,” chief executive Noel Quinn said in a statement.

The bank is focused on “achieving our target return of at least 12% from 2023 and, therefore, higher distributions to our shareholders,” he added.

The lender did not declare a dividend for the quarter. He had earlier said he intended to return to paying quarterly dividends in 2023.

Write to Clarence Leong at [email protected]

– Clarence Leong


(END) Dow Jones Newswire

10-25-22 0116ET

Copyright (c) 2022 Dow Jones & Company, Inc.


Comments are closed.