In This Article:
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HSBC raises its near-term return on tangible equity goal
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First-half profit surges more than two-fold
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H1 results underpinned by rising rates worldwide
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London shares rise nearly 3%
(Rewrites, updates shares, adds chart)
By Lawrence White and Selena Li
LONDON/HONG KONG, Aug 1 (Reuters) - HSBC Holdings raised its key profitability target and announced a fresh $2 billion share buyback on Tuesday, as rising central bank interest rates worldwide helped it more than double its income for the first half of the year.
That helped the bank raise its near-term return on tangible equity goal to at least mid-teens for 2023 and 2024, up from a previous target of at least 12% for this year and a reported level of 9.9% for 2022.
The London-based lender's robust performance update came after it quashed a vote by activist shareholders including Ping An Insurance in May, who had pressured the bank to spin off its operations in Asia.
HSBC's shares in London rose 2.7% against a flat FTSE 100 benchmark index. The bank's shares have climbed 68% over two years, while rival Barclays has fallen 14% amid turbulence in its investment bank over the period.
HSBC's bull run shows how it is less reliant on its investment bank, where its income nonetheless rose 16% in the first half while U.S. and European rivals have seen sharp revenue declines as dealmaking stalls.
The real driver of HSBC's results was near-40% gains in income for the commercial banking and retail and wealth management divisions, more staid areas of banking where lending margins have risen as central bank rates march higher.
The lender lifted its forecast for net interest income this year to be above $35 billion instead of $34 billion, although analysts at Jefferies said they had looked for an upgrade nearer to $36 billion.
Europe's largest bank with a market value of $162 billion posted a pretax profit of $21.7 billion for the first six months this year, versus $9.2 billion a year earlier and better than analysts' average forecast of $20.9 billion.
HSBC said it would pay an interim dividend of 10 cents per share.
WARNS OF PAIN FOR CUSTOMERS
Despite the surge in profit, HSBC warned of pain to come for many customers given the uncertain economic outlook, particularly in Britain where sticky inflation and steadily rising interest rates are squeezing households.
"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," CEO Noel Quinn said in the bank's earnings statement