HSBA Holdings (HSBA.L) reported a staggering 212% increase in quarterly profit on Tuesday, significantly surpassing the expected $8.64 billion. The bank declared a pretax profit of $12.9 billion for the first quarter ending March, compared to $4.2 billion during the same period last year.
These impressive results were bolstered by a reversal of a $2 billion impairment previously taken against the planned sale of its French business, which may not proceed as initially intended.
HSBC also announced its first quarterly dividend since 2019 – amounting to $0.10 per share – following shareholder calls to increase dividend payouts.
The strong financial performance can be largely attributed to rising interest rates worldwide, which have served to boost the lender's income and enabled it to pay dividends once again after two years.
"The global rise in interest rates has been advantageous for our business," said David Harrison, CEO of HSBC Holdings. "Our balance sheets have benefited from aggressive policy tightening measures implemented across various countries."
However, this surge in interest rates has also contributed to banking sector turmoil – particularly in the United States where regulators seized First Republic Bank and sold its assets to JPMorgan Chase & Co on Monday.
In addition to announcing their robust quarterly profits and reinstated dividends, HSBC revealed that they had reversed their previous decision regarding a $2 billion impairment taken against the potential sale of their French business due to uncertainty surrounding whether or not this deal will reach completion.
Despite these soaring profits and positive outlooks for investors, HSBC refrained from raising its key performance target – aiming instead for at least 12% return on tangible equity beginning this year onwards. "We remain committed towards meeting our current performance targets while adjusting accordingly based on market conditions," added Harrison when discussing future plans.