HSBC’s quarterly profit plunged 80 percent as it took a $3 billion charge on the value of its stake in a Chinese bank and a further write-down on commercial real estate, underlining how a slowdown in the country’s economy continues to hit international lenders.
Profits for the final three months of 2023 fell to $1 billion from $5 billion in the same period a year earlier, HSBC said on Wednesday.
The UK-based lender earns most of its profits in Asia and holds a 19 percent stake in Bank of Communications.
“BoCom remains a strong partner in China, and we remain focused on maximizing the mutual value of our partnership. Our positive views on the medium and long-term structural growth opportunities in mainland China are unchanged,” it said.
While rising interest rates globally boosted HSBC’s full-year earnings to a record, the bank has faced headwinds over the past year in China, one of its key growth markets.
The ongoing real estate meltdown has not only hurt the world’s second-largest economy but has forced HSBC to set aside money to cover potential losses, including $200 million in the quarter.
At the same time, HSBC announced a $2 billion share buy-back and a fourth-quarter interim dividend of 31 cents a share. Chief executive officer Noel Quinn warned in the statement that the macro environment remains “challenging”, and the outlook remains uncertain amid geopolitical volatility in Europe and the Middle East.
The bank’s shares slid as much as 3.8%, as trading resumed in Hong Kong on Wednesday.
HSBC on Wednesday reported a 6% hike in costs in 2023, blaming spending on levies in the US and Britain. Europe's biggest bank by assets also forecasts a 5% rise in costs in 2024, after committing to invest despite stubbornly high inflation.
