Profits for the third quarter at London-headquartered HSBC more than doubled, in part due to higher interest income from rising rates.

HSBC registered a pre-tax profit of $7.7 billion in the third quarter, according to the bank’s financial results, marking a 141 percent year-on-year increase. 

This was partly attributable to a $2.3 billion impairment recorded in the third quarter of 2022 which was related to the planned sale of the French retail banking business, of which $2.1 billion was reversed in the first quarter of this year.

Interest Income Boost

Overall revenue rose 40 percent to $16.2 billion, driven by growth in interest income from higher rates. Net interest income grew nearly 29 percent to $27.5 billion as the bank’s net interest margin rose 19 basis points to 1.7 percent. Due to the aforementioned impairment, non-interest income surged 97 percent to $3.4 billion.

Operating expenses increased by 2 percent to around $800 million, primarily due to higher technology costs, the effects of rising inflation and an increase in performance-related compensation. Offsetting this was lower restructuring and other related costs following the completion of the bank's cost-saving program at end-2022.

In the first nine months of 2023, HSBC recorded a pre-tax profit of $29.4 billion, up 145 percent year-on-year. 

Dividend, Buyback

HSBC’s board approved a third interim dividend of 10 cents per share and the bank also intends to kick off another share buyback of up to $3 billion, which is expected to have a 0.4 percentage point impact on its CET1 capital ratio. 

«We have had three consecutive quarters of strong financial performance and are on track to achieve our mid-teens return on tangible equity target for 2023. There was good broad-based growth across all businesses and geographies, supported by the interest rate environment,» said HSBC group CEO Noel Quinn.

«We are pleased to again reward our shareholders. We have now announced three share buybacks in 2023 totalling up to $7 billion, as well as three quarterly dividends which total $0.30 per share. This underlines the substantial distribution capacity that we have, even as we continue to invest in growth.»