HSBC shares gained 5.5% to 542p in early morning trading on Monday, after the banking firm announced an $800 million post-tax profit growth to $9.2 billion in HY1 2022.
The bank reported a reported pre-tax profit fall of $1.7 billion to $9.2 billion, reflecting a net charge for expected credit losses and additional credit impairment charges, against a net release in HY1 2021.
HSBC confirmed an adjusted pre-tax profit slide of $900 million to $10.7 billion.
The company highlighted a slight revenue drop to $25.2 billion as a result of foreign currency translation impacts and HY1 2022 losses on scheduled business disposals.
Meanwhile, HSBC reported an adjusted revenue rise of 4% to $25.7 billion on the back of higher net interest income and high revenue performance from Global Foreign Exchange in Global Banking and Markets.
The banking firm added its reported ECL were a net charge of $1.1 billion, reflecting stage three charges of $800 million, alongside extra allowances to reflect increased economic uncertainty and inflation, slightly offset by remaining Covid-19 reserves.
HSBC also noted an operating expenses decrease of 4% linked to foreign currency translation impacts, while its adjusted operating expenses fell 1%.
The group confirmed a return on tangible equity of of 9.9%, marking a 0.5% growth year-on-year, including a 2.3% annualised impact of a deferred tax asset gain.
Meanwhile, its CET1 ratio reached 13.6%, representing a 2.2% decline against 31 December 2021.
HSBC commented its FY 2022 outlook remained positive, with an anticipated net interest income of at least $31 billion for FY 2022 and a minimum of $37 billion for FY 2023.
“Our first-half performance reflects the continued impact of our strategy, with gathering revenue momentum and tight cost control,” said HSBC CEO Noel Quinn.
“The progress that we’ve made growing and transforming HSBC means we are in a strong position as we enter the current rates cycle.”
“We are confident of achieving a return on tangible equity of at least 12% from 2023 onwards, which would represent our best returns in a decade.”
The banking giant said it expended a dividend payout ratio of 50% for 2023 and 2024, with an intention to return to quarterly dividends in 2023.
However, HSBC confirmed it expected the quarterly dividend for the first three quarters to initially be reinstated at a lower level than its prior dividend of 10c per share paid until the end of 2019.
“As a result, we are providing more specific dividend payout ratio guidance of around 50% for 2023 and 2024. We understand and appreciate the importance of dividends to all of our shareholders,” said Quinn.
“We will aim to restore the dividend to pre-Covid-19 levels as soon as possible. We also intend to revert to quarterly dividends in 2023.”
HSBC announced a HY1 dividend of 9c per ordinary share, which is set to be paid in cash.