At a glance
We had another strong profit performance in the first half of 2024, which is further evidence that our strategy is working.
For the period ended 30 June 2024
Highlights:
- Profit before tax was broadly stable compared with 1H23. The figure included a $0.2bn net favourable revenue impact of notable items related to gains and losses on certain strategic transactions (see Context behind the numbers)
- Annualised return on average tangible equity (RoTE) was 21.4%, or 17.0% excluding notable items
- Revenue increased by $0.4bn vs 1H23, including the same gains and losses highlighted above
- We approved a second interim dividend of $0.10 per share
- We intend to initiate a share buyback of up to $3bn, which we expect to complete within three months
- Operating expenses of $16.3bn were $0.8bn or 5% higher than in 1H23; target basis operating expenses rose by 7%
- Expected credit losses and other credit impairment charges (ECL) were $1.1bn, a reduction of $0.3bn vs 1H23
Group Chief Executive
“After delivering record profits in 2023, we had another strong profit performance in the first half of 2024, which is further evidence that our strategy is working.
“Our investment in Wealth is delivering higher, more diversified revenue and we continue to grow our core international and scale businesses, all of which helped us to provide $13.7bn of distributions in respect of the first half.
“We are confident that we have the right strategy and model to grow revenue, even in a lower interest rate environment, and are therefore providing new guidance of a mid-teens return on tangible equity in 2025.”
Noel Quinn, HSBC Group Chief Executive
31 July 2024
Outlook
We will now target a RoTE in the mid-teens for both 2024 and 2025, excluding the impact of notable items.
Based on our current forecast, we expect banking net interest income in 2024 of around $43bn, depending on the path of interest rates globally.
Loan growth was 1% in 1H24. Over the medium to long term, we continue to expect mid-single digit year-on-year percentage growth in customer lending.
We’re reiterating our cost growth guidance of approximately 5% for 2024, compared with 2023, on a target basis, and we expect ECL charges of around 30bps to 40bps of average gross loans in 2024 (including customer lending balances transferred to held for sale).
We intend to manage our common equity tier 1 capital ratio within our medium-term target range of 14% to 14.5%. In addition, our target dividend payout ratio is 50% for 2024, excluding notable items.
Context behind the numbers
In 1H24, we completed the disposal of our banking business in Canada, recognising a gain of $4.8bn. We also recognised an impairment of $1.2bn following the classification of our business in Argentina as held for sale.
Results in 1H23 included the impact of a $2.1bn reversal of an impairment relating to the sale of our retail banking operations in France and a $1.5bn gain recognised on the acquisition of Silicon Valley Bank UK.
Higher operating expenses were mainly due to higher technology spend and investment, inflationary pressures and an increase in the performance-related pay accrual.
Target basis operating expenses are measured on a constant currency basis, excluding notable items, the impact of retranslating the prior year results of hyperinflationary economies at constant currency, and the direct costs from the sales of our France retail banking operations and our banking business in Canada.
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