HSBC’s quarterly profit fell 80% due to revaluation of stake in Chinese Bank of Communications

HSBC’s pre-tax profit in the fourth quarter fell by 80%, from $5.1 billion to $1 billion, according to reporting British bank. The bank’s shares on the Hong Kong Stock Exchange lost 3.4% after the results were announced.

The drop in profit was caused by a write-off of $2 billion due to the closing of a deal to sell the retail banking business in France for a symbolic €1, as well as a write-down of $3 billion, unexpected for investors and analysts, due to a revaluation of the value of HSBC’s 19 percent stake in the Chinese Bank of Communications.

At the end of 2023, HSBC’s pre-tax profit grew by 78% to a record $30.3 billion. However, due to the aforementioned write-offs in the fourth quarter, this figure fell short of the $34 billion expected by analysts.

Following an overall strong year, HSBC has announced an additional $2 billion share buyback program ahead of the release of its next quarter’s financial results. In addition, the bank may pay its shareholders an additional dividend of $0.21 per share in the first half of 2024 following the sale of its Canadian business to Royal Bank of Canada. Last year, the bank paid out $19 billion to shareholders.

The other day, Russian President Vladimir Putin approved the sale of the Russian subsidiary of HSBC, more about this in the material “Expobank was allowed to buy HSBC Bank”.

Kirill Sarkhanyants