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HSBC announced on Tuesday that Q4 pre-tax profit is expected to soar by nearly 1.3 times at most, and the resumption of quarterly interest has become the focus of the market

2023-02-20T00:12:47.725Z


HSBC Holdings (0005) announced its 2022 full-year results on Tuesday (21st). The market expects that HSBC’s recorded benchmark profit before tax will drop compared with the same period in 2021, with a median drop of 7.74%, mainly due to the weak global economy.


HSBC Holdings (0005) announced its 2022 full-year results on Tuesday (21st). The market expects that HSBC’s recorded benchmark profit before tax will drop compared with the same period in 2021, with a median drop of 7.74%, mainly due to the weak global economy, and The impact of the new crown epidemic.

In addition, the market is concerned about whether the management of HSBC will confirm the resumption of quarterly dividends from 2023 and the share repurchase plan.


Analysts believe that benefiting from last year's interest rate hike cycle, net interest income is expected to offset the shrinking non-interest income due to the epidemic, but it is unknown whether the quarterly dividend will be announced in this performance. If the market is too optimistic, it may expect Frustrated, and think that this year's annual results may not explain too many repurchase arrangements.


According to the comprehensive analyst forecast of "Bloomberg", the pre-tax profit for the fourth quarter is expected to range from 4.349 billion to 6.040 billion US dollars, an increase of 63.25% to 126.73% year-on-year.

The median forecast is US$5.156 billion, an increase of 93.5% year-on-year and 63.83% quarter-on-quarter.

Analysts predict that HSBC's full-year listed benchmark pre-tax profit will range from 14.849 billion to 23.534 billion US dollars.

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Median full-year pre-tax profit of nearly $17.5 billion

For the whole year, analysts predict that HSBC's full-year reported benchmark pre-tax profit will range from 14.849 billion to 23.534 billion US dollars, with a median of 17.452 billion US dollars, a slight decrease of 7.74% year-on-year.

During the year, the U.S. Federal Reserve continued to raise interest rates aggressively, accumulatively raising interest rates by 4.5%.

Analysts predict that HSBC's annual net interest income will range from US$30.914 billion to US$32.579 billion, with a median of US$31.949 billion; non-interest income will range from US$18.003 billion to US$24.009 billion, with a median of US$19.914 billion.

The net interest margin ranged from 1.42% to 1.49%, with a median of 1.47%, an increase of 0.27 percentage points year-on-year.

In terms of expected credit losses, major banks comprehensively predict that expected credit losses in the fourth quarter will range from US$892 million to US$1.318 billion, and the median expected credit losses for the whole year will be US$3.146 billion. In 2021, there will be expected credit losses of US$928 million. Dollar.

The annual dividend per share is expected to range from US$0.25 to US$0.35, with a median of US$0.3, an increase of 20% compared to the full-year dividend of US$0.25 per share in 2021.

In September last year, HSBC Chief Financial Officer Ewen Stevenson said that he would try to balance dividends and share repurchases, and return the remaining capital to shareholders.

Morgan Stanley expects to resume paying quarterly dividends this year

Morgan Stanley, a leading bank, expects that HSBC Holdings' reported profit before tax in 2022 will fall by 7.9% year-on-year to US$17.4 billion.

It is predicted that the final dividend of 21 cents will be distributed, and the annual dividend per share will be 30 cents.

Morgan Stanley expects that HSBC's net interest income in the fourth quarter will record an increase of 8% quarter-on-quarter and 36% year-on-year, mainly due to the expected expansion of net interest margin and moderate loan growth.

In terms of non-interest income, it is expected to fall by 9% quarter-on-quarter and 1% year-on-year, in response to seasonally weaker trade volume and restricted wealth management expenses.

HSBC announced in the 2022 interim results that it will resume paying quarterly dividends in 2023. However, it is expected that in the initial stage of resuming quarterly dividends, the dividends for the first three quarters will be lower than the previous quarterly dividend levels of US$0.1 per share before the end of 2019.

A repurchase plan is expected to be announced in the second half of the year

Morgan Stanley believes that HSBC will resume distributing quarterly dividends this year as indicated in the interim report, and is expected to announce a repurchase in August this year, with a scale of about US$1 billion.

In addition, HSBC announced the sale of its Canadian business in November last year. It is expected that the pre-tax profit of the sale will be about US$5.7 billion.

Morgan Stanley estimates that HSBC will return about 13% of its market value to shareholders in the next 13 months, taking into account the return from the sale of its Canadian business.

In September last year, HSBC Chief Financial Officer Ewen Stevenson said that he would try to balance dividends and share repurchases, and return the remaining capital to shareholders.

He mentioned that the group is considering resuming share repurchases in the second half of next year.

Morgan Stanley maintains an "overweight" rating on HSBC with a target price of HK$59.8.

Wen Jie, Head of Investment Strategy Department of KGI Asia, believes that HSBC's pre-tax profit is expected to record a year-on-year decline this year, but its adjusted profit will rebound.

Wen Jie: Full-year adjusted earnings are expected to pick up

Wen Jie, head of KGI’s Asia Investment Strategy Department, believes that due to the increase in credit losses (ECL) and the impairment of about US$2.5 billion in the sale of French retail banks, HSBC’s full-year pre-tax profit is expected to record a year-on-year decline. But adjusted earnings picked up.

Wen Jie said that since the world is in an interest rate hike cycle in 2022, the Federal Reserve has raised interest rates by 4.5% in total, driving HSBC and other bank stocks to increase their net interest income.

Even though non-interest income is affected by factors such as the epidemic, Wen Jie believes that the increase in net interest income can offset the relevant negative impacts. In addition, HSBC’s cost control has improved during the year, so this year’s adjusted profit is expected to record a rebound.

As for dividends and repurchases, Wen Jie believes that the resumption of quarterly dividends is within expectations, and the management has "opened their mouths", but he admits that it is difficult to predict when the announcement will be made, "I will decide next time? Not sure", but if so The announcement of the plan in the first quarter of this year will disappoint the market.

He also pointed out that although paying dividends twice or four times a year has little impact on shareholder returns, the news will have a greater impact on market sentiment.

In terms of stock price, the current share price of HSBC is as high as 58 yuan, which is the highest level in the past three years.

Wen Jie believes that some institutional investors have long been optimistic about HSBC's outstanding performance in 2023 and look forward to paying quarterly dividends, but believe that the current price has already reflected certain positive factors.

He believes that short-term stock prices still have callback pressure, but the mid-to-long term is still strong.

Goldman Sachs predicts that Hibor will rebound and maintains the Hang Seng Sell rating to HSBC and Bank of China "Buy"

Source: hk1

All news articles on 2023-02-20

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