Europe's largest lender HSBC's full-year profit before tax more than doubled in 2021 and the bank announced a $1 billion share buyback amid a continued global economic recovery.
Pretax profit surged to $18.9bn last year, up from $8.8bn in 2020, driven by a net release of expected credit losses and other credit impairment charges, as well as a higher share of profit from the bank's associates, it said on Tuesday.
The results missed the $19.1 billion average estimate of 17 analysts compiled by HSBC itself.
All regions were profitable in 2021, notably HSBC UK, where reported profit before tax increased by $4.5bn to $4.8bn. The lender's Asia operations contributed $12.2bn to reported profit before tax and all other regions reported a material recovery in profitability.
HSBC said it released $900 million it had provisioned for bad loans, compared with an $8.8bn charge it booked against expected losses in 2020.
The bank's board approved a second interim dividend of $0.18 per share, bringing the total for 2021 to $0.25 per share. The lender plans a further share buyback of up to $1bn, after the existing $2bn buyback is concluded.
“We made good progress against our strategy in 2021, which contributed to a strong financial performance that was supported by the global economic recovery,” said group chief executive Noel Quinn.
“All of our regions were profitable and we saw growth in the fourth quarter of 2021 in many of our business lines.”
Fourth-quarter profit before tax increased by $1.3bn to $2.7bn as expenses and bad loan provisions fell while revenue grew. Adjusted profit before tax surged 79 per cent to $4bn.
Adjusted revenue in the fourth quarter rose 2 per cent to $12.1bn. The lender booked expected credit losses of $500 million, which included an increase in allowances to reflect developments in China’s commercial property sector.
“Good progress has been made in executing our strategic plan. A number of key milestones were reached in 2021 — including resolving the future of our retail businesses in France and the US, the organic build-out of HSBC Personal Wealth Planning in mainland China and acquisitions in Singapore and India to accelerate the development of our wealth capabilities across Asia,” said group chairman Mark Tucker.
“At the same time, our work to digitise HSBC and play a leading role in the net zero transition has continued at pace. There is more to do — and it will be important to see successive consecutive quarters of growth — but good momentum exists across our businesses.”
HSBC aims to cut emissions by 34 per cent from oil and gas clients by 2030. The bank said it is scaling up its investment and financing for renewable and other low-emission sources of electricity.
HSBC, which is increasingly focused on Asia to drive income, said despite lower global interest rates, revenue grew in strategic focus areas, including its wealth management and global trade and receivables finance businesses.
Its reported operating expenses broadly remained unchanged at $34.6bn while adjusted operating expenses dropped 1 per cent to $32.1bn, despite inflationary pressures, as the impact of “cost-saving initiatives and a reduction in the UK bank levy charge absorbed higher performance-related pay and continued growth in technology investment”, the bank said.
Customer lending in 2021 was up $8bn from the previous year on a reported basis and $23bn on a constant currency basis, driven in part by growth in mortgage balances, primarily in the UK and Hong Kong markets.
“We carry good business momentum into 2022 in most areas and expect mid-single-digit lending growth over the year,” the bank said.
However, it expects a weaker wealth business performance in Asia in the first quarter of this year.
HSBC said its expected loan losses charges will normalise towards 30 basis points of average loans in 2022, based on current consensus economic forecasts and default experience.
“Uncertainty remains, given recent developments in China’s commercial real estate sector, while inflationary pressures persist in many of our markets,” it said.
“We continue to target 2022 adjusted operating expenses in line with 2021, despite inflationary pressures, with cost to achieve spend of $3.4bn expected to generate over $2bn of cost savings in 2022.”
A combination of business growth, acquisitions and regulatory changes, will drive business growth this year and the bank's net interest income outlook is now “significantly more positive".
“If policy rates were to follow the current implied market consensus, we would expect to deliver a RoTE [return on tangible equity] of at least 10 per cent for 2023, one year ahead of our previous expectations.”
FIVE%20TRENDS%20THAT%20WILL%20SHAPE%20UAE%20BANKING
%3Cp%3E%E2%80%A2%20The%20digitisation%20of%20financial%20services%20will%20continue%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Managing%20and%20using%20data%20effectively%20will%20become%20a%20competitive%20advantage%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Digitisation%20will%20require%20continued%20adjustment%20of%20operating%20models%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Banks%20will%20expand%20their%20role%20in%20the%20customer%20life%20through%20ecosystems%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20The%20structure%20of%20the%20sector%20will%20change%3C%2Fp%3E%0A
Pharaoh's curse
British aristocrat Lord Carnarvon, who funded the expedition to find the Tutankhamun tomb, died in a Cairo hotel four months after the crypt was opened.
He had been in poor health for many years after a car crash, and a mosquito bite made worse by a shaving cut led to blood poisoning and pneumonia.
Reports at the time said Lord Carnarvon suffered from “pain as the inflammation affected the nasal passages and eyes”.
Decades later, scientists contended he had died of aspergillosis after inhaling spores of the fungus aspergillus in the tomb, which can lie dormant for months. The fact several others who entered were also found dead withiin a short time led to the myth of the curse.
The biog
Hobbies: Salsa dancing “It's in my blood” and listening to music in different languages
Favourite place to travel to: “Thailand, as it's gorgeous, food is delicious, their massages are to die for!”
Favourite food: “I'm a vegetarian, so I can't get enough of salad.”
Favourite film: “I love watching documentaries, and am fascinated by nature, animals, human anatomy. I love watching to learn!”
Best spot in the UAE: “I fell in love with Fujairah and anywhere outside the big cities, where I can get some peace and get a break from the busy lifestyle”
UAE currency: the story behind the money in your pockets
COMPANY%20PROFILE
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What sanctions would be reimposed?
Under ‘snapback’, measures imposed on Iran by the UN Security Council in six resolutions would be restored, including:
- An arms embargo
- A ban on uranium enrichment and reprocessing
- A ban on launches and other activities with ballistic missiles capable of delivering nuclear weapons, as well as ballistic missile technology transfer and technical assistance
- A targeted global asset freeze and travel ban on Iranian individuals and entities
- Authorisation for countries to inspect Iran Air Cargo and Islamic Republic of Iran Shipping Lines cargoes for banned goods
Key findings of Jenkins report
- Founder of the Muslim Brotherhood, Hassan al Banna, "accepted the political utility of violence"
- Views of key Muslim Brotherhood ideologue, Sayyid Qutb, have “consistently been understood” as permitting “the use of extreme violence in the pursuit of the perfect Islamic society” and “never been institutionally disowned” by the movement.
- Muslim Brotherhood at all levels has repeatedly defended Hamas attacks against Israel, including the use of suicide bombers and the killing of civilians.
- Laying out the report in the House of Commons, David Cameron told MPs: "The main findings of the review support the conclusion that membership of, association with, or influence by the Muslim Brotherhood should be considered as a possible indicator of extremism."
The specs
Engine: 2-litre or 3-litre 4Motion all-wheel-drive Power: 250Nm (2-litre); 340 (3-litre) Torque: 450Nm Transmission: 8-speed automatic Starting price: From Dh212,000 On sale: Now
Isle of Dogs
Director: Wes Anderson
Starring: Bryan Cranston, Liev Schreiber, Ed Norton, Greta Gerwig, Bill Murray, Jeff Goldblum, Scarlett Johansson
Three stars
Company profile
Date started: 2015
Founder: John Tsioris and Ioanna Angelidaki
Based: Dubai
Sector: Online grocery delivery
Staff: 200
Funding: Undisclosed, but investors include the Jabbar Internet Group and Venture Friends
More coverage from the Future Forum
Tips for avoiding trouble online
- Do not post incorrect information and beware of fake news
- Do not publish or repost racist or hate speech, yours or anyone else’s
- Do not incite violence and be careful how to phrase what you want to say
- Do not defame anyone. Have a difference of opinion with someone? Don’t attack them on social media
- Do not forget your children and monitor their online activities
How to watch Ireland v Pakistan in UAE
When: The one-off Test starts on Friday, May 11
What time: Each day’s play is scheduled to start at 2pm UAE time.
TV: The match will be broadcast on OSN Sports Cricket HD. Subscribers to the channel can also stream the action live on OSN Play.
57%20Seconds
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UAE currency: the story behind the money in your pockets
KILLING OF QASSEM SULEIMANI
BIO
Favourite holiday destination: Turkey - because the government look after animals so well there.
Favourite film: I love scary movies. I have so many favourites but The Ring stands out.
Favourite book: The Lord of the Rings. I didn’t like the movies but I loved the books.
Favourite colour: Black.
Favourite music: Hard rock. I actually also perform as a rock DJ in Dubai.
The bio:
Favourite holiday destination: I really enjoyed Sri Lanka and Vietnam but my dream destination is the Maldives.
Favourite food: My mum’s Chinese cooking.
Favourite film: Robocop, followed by The Terminator.
Hobbies: Off-roading, scuba diving, playing squash and going to the gym.
Company%20Profile
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Killing of Qassem Suleimani
Killing of Qassem Suleimani
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
More on Quran memorisation:
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Cryopreservation: A timeline
- Keyhole surgery under general anaesthetic
- Ovarian tissue surgically removed
- Tissue processed in a high-tech facility
- Tissue re-implanted at a time of the patient’s choosing
- Full hormone production regained within 4-6 months
