SBC poured fuel on the row about bank profits today with stonking profits of nearly £17 billion in just the last six months.
That’s largely thanks to rising interest rates around the world and a $1.5 billion gain from buying the UK arm of the collapsed Silicon Valley Bank.
These profits for the first half of the year are double for the same period a year ago and will increase calls for a windfall tax on profits that critics say are entirely down to interest rate rises and little to do with executive prowess.
CEO Noel Quinn gets towards £6 million a year in pay, a package that could hit £10 million depending on results.
Regulators and politicians are demanding that banks are quicker to pass on rate rises to savers as quickly as they do for borrowers. The Financial Conduct Authority is pledging robust action against banks that don’t treat customers fairly.
Tobias Gruber CEO of My Community Finance, said: “I find it concerning that despite HSBC’s massive profit surge there seems to be a lack of commitment to passing on the benefits to their customers. The substantial increase in profits, fueled by rising interest rates globally, should prompt banks like HSBC to prioritise their customers by offering fairer savings rates and mortgage terms.”
HSBC is so awash with cash it is launching a $2 billion share buyback programme to boost earnings per share. That is on top of a similar buyback earlier in the year.
There is also a dividend of 10 cents a share. Today the stock jumped 14p to 660p.
Unlike its UK high street rivals such as Lloyds, HSBC makes most of its money in Asia, leading to regular talk that it will quit Britain altogether.
CEO Noel Quinn said: “There was good broad-based profit generation around the world, higher revenue in our global businesses driven by strong net interest income, and continued tight cost control.”
It is ditching offices in Canary Wharf for smaller HQ in the City.
Today it insists it is “absolutely committed to UK” and “very happy in London” despite shift away from Canary Wharf.
The results ought to help fend off calls from major shareholder Ping An to split the business in two – an easter and a western arm. Most shareholders have already rejected the Ping An proposal.
Quinn warned that tougher times are coming as inflation and higher rates bite.
He said: “With more mortgage customers due to roll off fixed-term deals in the next six months, and further rate rises expected, tougher times are ahead.”
Rob Murphy at Edison Group said: “Despite these impressive results, HSBC remains cautious about the economic outlook, particularly for its UK customers. The combination of high inflation and rising interest rates could put pressure on households, leading to uncertainties in the future.”
Citigroup analyst Andrew Coombs said: “Overall good results, encouraging buyback update, and positive outlook. This should be taken well.”