HSBC (HSBA) Q3 2024 earnings summary

Executive summary

• Profit before tax for Q3 2024 reached $8.5 billion, up 11% year-over-year, driven by strong performances in Wealth, Personal Banking, and Global Banking and Markets, with revenue of $17 billion reflecting business momentum.

• Announced a $4.8 billion capital return via a $0.10/share interim dividend and a new $3 billion share buyback, with 9% of shares repurchased since early 2023.

• Organisational structure simplified to four businesses in two regions, reducing executive committee size and streamlining governance to accelerate strategic execution.

• Return on tangible equity (ROTE) was 19.3% (16.7% excluding notable items), and EPS was $0.34, up $0.05 year-over-year.

• Total distributions for 2024 reached $18.4 billion, including the new $4.8 billion for Q3 2024.

Financial highlights

• Revenue rose to $17 billion, up $1.1 billion or 7% year-over-year, driven by $1.6 billion increase in fee and other income, especially in wholesale transaction banking and wealth.

• Banking net interest income (NII) was $10.6 billion for Q3, stable sequentially, with FY24 guidance unchanged at ~$43 billion.

• ECL charge for Q3 was $1 billion (40 bps of average loans), with year-to-date annualized ECL at 28 bps, in line with 30-40 bps guidance.

• Customer loans stable at $969 billion; deposits up 1% to $1,661 billion, mainly from Hong Kong Wealth and Personal Banking.

• Operating expenses in Q3 2024 were $8.1 billion, up 2% year-over-year, mainly from tech investment and inflation.

Outlook and guidance

• Mid-teens ROTE guidance for 2024 and 2025, excluding notable items, remains unchanged.

• 2024 banking NII guidance unchanged at around $43 billion; cost growth targeted at ~5% for 2024.

• ECL charges expected within 30-40 bps of average loans for the full year.

• CET1 ratio to be managed within 14–14.5% medium-term range; dividend payout ratio target of 50% for 2024.

• Sale of Argentina business expected to complete in Q4 2024.