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What a Banker Needs to Know - 9 March 2022 (Wed)

Banking major HSBC reported a surge in pre-tax quarterly profits to $5.1bn vs. $1.1bn last year, beating estimates of $3.7bn. For H1, pre-tax profits stood at $10.8bn, more than double the 1H number last year. Revenues fell 4.5% YoY to $25.55bn in H1. While its lending grew by $21.5bn, deposits also grew by $26.3bn with net interest margins (NIM) down 22bp YoY to 1.21% in H1. The bank said it cancelled a further $300mn of provisions, releasing $719mn of bad-loan provisions YTD vs. a $6.9bn charge in 1H2020. The bank still retains Covid-related reserves of about $2.4bn. All of its regions were profitable in the half year, with its UK division reporting a pretax profits of $2.1bn. HSBC is targeting a dividend payout ratio of 40-55% of EPS in 2021, announcing an interim dividend of 7 cents a share. Its CET1 ratio stood at 15.6%, down 30bp since end-2020. CEO Noel Quinn said,” These are good results that reflect the return of growth in our main markets and marked progress in the execution of our strategy”.

HSBC’s dollar bonds were flat – its 4% Perp was at 101.4, yielding 3.7%

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