HSBC Holdings PLC’s third-quarter net profit slid 46% from a year earlier as the bank booked impairment charges for the disposal of its retail-banking operations in France and a rise in credit provisions.
Net operating income dropped 3.2% to $11.62 billion, despite a 30% rise in net interest income to $8.58 billion as rising interest rates globally boosted income from loans. The lender said the decline was due to the impairment on the planned disposal of its banking operations in France and “adverse foreign-currency translation impacts.”
HSBC set aside more provisions against bad loans, reporting expected credit losses of $1.1 billion for the quarter, which reflect “increased economic uncertainty, inflation, rising interest rates and the ongoing developments in mainland China’s commercial real-estate sector,” it said. That compares with a net release of $659 million in the same period last year.
The bank upgraded its guidance for net interest income for 2022 to $32 billion from at least $31 billion previously. But for 2023, it now expects net interest income of at least $36 billion, down from its previous guidance of at least $37 billion, partly due to sterling weakening against the greenback.
“We retained a tight grip on costs, despite inflationary pressures, and remain on track to achieve our cost targets for 2022 and 2023,” Chief Executive Noel Quinn said in a statement.
The bank is focused on “delivering our returns target of at least 12% from 2023 onwards and, as a result, higher distributions to our shareholders,” he added.
The lender didn’t declare a dividend for the quarter. It had said earlier that it intends to return to paying quarterly dividends in 2023.
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