HSBC more than doubled its profit in 2021, despite flat revenues and costs, driven by a significant improvement in expected credit losses.
HSBC reported $14.7 billion in profit after tax for 2021, according to its latest results, marking a 141 percent increase compared to 2020.
Revenue ($49.6 billion, down 2 percent) and operating expenses ($32.1 billion, up 1 percent) stayed flat but the bank saw a significant improvement in expected credit losses (ECL) with a net release of $900 million compared to an $8.8 billion charge last year.
«The global economic recovery supported our 2021 financial performance, as the release of expected credit losses resulted in an improvement in the profitability of the Group and all global businesses,» said HSBC group chief executive Noel Quinn.
«Our interest-rate sensitive business lines continued to be adversely impacted by low interest rates, but our net interest margin remained broadly stable during 2021 and the outlook is now significantly more positive.»
Associate-Linked Profit
In addition to better ECLs, the bank also highlighted a higher share of profit from its associates as a key driver of the positive results in 2021, increasing 11 percent to $29.5 billion.
HSBC’s principal associates include Bank of Communications and the Saudi British Bank.
All Regions Profitable
The bank was profitable across all regions, most notably in Europe where its U.K. business posted a pre-tax profit of $3.5 billion compared to a $4.2 billion loss in the previous year.
But pre-tax profit in Asia dipped 5 percent to $12.2 billion with a material decrease in Hong Kong from $8.2 billion in 2020 to $5.9 billion in 2021.
Asia: Q1 Wealth Weakness
While the bank observes «good business momentum» coming into 2022 in most areas, with expectations of mid-single-digit lending growth, Asia may continue to see headwinds.
The bank expects weaker performance for Asia in the first quarter, specifically within the region’s wealth unit.
