HSBC Holdings Share Price Plunged 7.97% on Mixed FY23 Results

The HSBC Holdings plc (LON: HSBA) share price plunged 7.97% after its Q4 and full-year 2023 financial results were released. The banking group focusing on Asia noted that its pre-tax profit rose 78% to $30.3 billion, fueled by the high global interest rates. However, it was below the $34.1 billion average estimate of brokers polled by the bank. 

The banking group’s revenues rose by 30% to $66.1 billion. However, the global bank revealed that it had taken a $3 billion impairment charge due to its stake in China’s Bank of Communications. The bank confirmed that China’s recovery after the Covid-19 pandemic was much more challenging than initially expected. 

HSBC singled out China’s struggling property sector, which is highly indebted, as a significant drag on the country’s economic growth. The company expects to incur a $3.4 billion credit loss due to its exposure to mainland China’s commercial real estate developers. 

The bank delivered a return on tangible equity (RoTE) of 14.6%, with an adjusted rate of 15.6% after excluding impacts from strategic transactions and the impairment of BoCom. It maintained a robust Common Equity Tier 1 (CET1) ratio of 14.8%

The firm completed the divestiture of retail banking operations in France, received approval for the sale in Canada, acquired SVB UK, and introduced HSBC Innovation Banking. It also returned approximately $19 billion to shareholders through dividends and buybacks for 2023. 

Initiated a share buyback program of up to $2.0 billion to be finalised before the announcement of the first quarter 2024 results; also planning to evaluate a special dividend of $0.21 per share in the first half of 2024 following the completion of the sale in Canada. 

The banking group’s expectations for 2024 include a decrease in interest rates following widespread success in inflation reduction efforts, though the exact timing remains unclear. It also expects Ongoing adjustments in global supply chains and trade patterns, with expansion in specific markets. 

HSBC is persistently aiming for a return on tangible equity (RoTE) in the mid-teens by 2024. It also wants to enhance revenue streams beyond net interest income, such as wealth management and transaction banking services. 

HSBC share price. 

The HSBC share price plunged 7.97% to trade at 591.55p from Tuesday’s closing price of 642.80p.