HSBC profit soars thanks to high interest rateson February 21, 2024 at 5:53 am

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Europe’s biggest bank, HSBC, has reported a jump of almost 80% in its annual profit in 2023.

HSBC building at Canada Square at the heart of Canary Wharf financial district.Image source, Getty Images

Europe’s biggest bank, HSBC, has posted an almost 80% jump in its pre-tax profit which rose to $30.3bn (£24bn) in 2023, fuelled by high interest rates.

It comes after central banks around the world raised interest rates in last 18 months to help curb rising prices.

Last week, rival lender NatWest revealed its highest yearly profit since the financial crisis in 2007.

But a slowdown in China’s economy has meant that the bank’s profit was not as high as expected.

Its chief executive, Noel Quinn, said in a statement: “Our record profit performance in 2023 enabled us to reward our shareholders with our highest full-year dividend since 2008.”

HSBC’s pre-tax profit for 2022 was $17.1bn and analysts were expecting it to jump to $34.1bn last year.

The bank makes most of its profits in Asia, especially China and Hong Kong.

China, the world’s second biggest economy is experiencing falling prices, known as deflation, which tends to discourage consumers from spending as they expect items to be cheaper in the future.

Investors have been closely watching HSBC’s exposure to China’s property sector, which has been engulfed in crisis since 2020.

Last month, a court in Hong Kong ordered the liquidation of debt-laden property giant Evergrande.

“China’s economy just can’t kick into gear,” Moody’s economist Harry Murphy Cruise had earlier told the BBC. “Investors are crying out for larger economic supports to be rolled out.”

Rival Asia-focused bank Standard Chartered is due to report its financial results later this week.

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