We delivered a good set of results, maintained our strong momentum and retained a tight grip on costs.

For the quarter ended 30 September 2022

Highlights

• Reported profit before tax was $3.1bn (3Q21: $5.4bn), including a $2.4bn impairment related to the planned sale of our retail banking business in France
• Adjusted profit before tax was $6.5bn (3Q21: $5.5bn)
• Our common equity tier 1 capital ratio was 13.4%; we aim to be within our target range of 14% to 14.5% during 1H23
• We’re building our Wealth business, with net new invested assets of $91bn since 3Q21, including $32bn in 3Q22
• We remain on track to deliver broadly stable costs in 2022 vs 2021
• Adjusted net interest income was up $2.5bn to $8.6bn vs 3Q21
• We expect a 50% dividend payout ratio for 2023 and 2024
• Expected credit losses (ECL) of $1.1bn reflected increased economic uncertainty, inflation and ongoing developments in mainland China’s commercial real estate sector

“We maintained our strong momentum in the third quarter and delivered a good set of results. Our strategy produced good organic growth in all three global businesses, and net interest income increased on the back of rising interest rates. We retained a tight grip on costs, despite inflationary pressures, and remain on track to achieve our cost targets for 2022 and 2023.”

“We are focused on executing our plans and delivering our returns target of at least 12% from 2023 onwards and, as a result, higher distributions to our shareholders.”

Noel Quinn, HSBC Group Chief Executive
25 October 2022

Our revenue outlook remains positive and we now expect net interest income of approximately $32bn in 2022 and at least $36bn in 2023. At our interim results, we provided guidance of at least $37bn – this reduction reflects the impact of sterling depreciation against the US dollar and a higher cost of funding in our trading book. We continue to monitor the expected path of interest rates.

We expect ECL charges to be around 30 basis points of average loans in 2022. For 2023 we expect to be at the higher end of our planning range of between 30 to 40 basis points, but with a higher degree of volatility given the uncertain market outlook.

We remain on track for 2022 adjusted operating expenses to be broadly stable, compared with 2021, and to target 2% growth in 2023. Notwithstanding increasing inflationary pressures, we continue to maintain strict cost discipline.

The impact of our growth and transformation programmes, as well as the impact of higher global interest rates, mean we continue to target a return on average tangible equity of at least 12% from 2023 onwards.

While our common equity tier 1 ratio position is below our medium-term target range of 14% to 14.5%, we intend to manage back to the bottom-end of our target range during 1H23. Once we are back within our target range, we will continue to manage capital efficiently, returning excess capital to shareholders as appropriate.

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