Annual profits

HSBC doubles its annual profits but considers China’s woes on several fronts | Economic news

HSBC said annual profits more than doubled in 2021, but it faces challenges on multiple fronts in its key Chinese market.

The Asia-focused but UK-based bank has warned that China’s “zero-COVID” measures to control the disease in Hong Kong are hurting the economy.

He added that the restrictions, aimed at curbing the Omicron variant, could affect his ability to attract and retain staff in the financial center in the future, although he insisted that there was no currently no problem in this regard.

HSBC said it also took a credit charge of $500 million in the final quarter of 2021, in part due to China’s lingering housing crisis.

HSBC’s UK branch has seen profitability recover sharply in 2021

But the charge only took away some of the shine from his annual performance.

HSBC reported pre-tax profits of $18.9bn (£13.9bn), down from $8.8bn in 2020, when pandemic restrictions weighed more heavily on the bank’s fortunes due to its exposure to Asia, which accounts for the majority of revenues and profits.

The bank said it has released $900 million in cash that it has set aside in case bad debts related to the pandemic increase.

It had taken a charge of $8.8 billion over expected losses last year.

Government support programs are believed to have shielded banks from the worst of the fallout.

HSBC said its UK arm saw a jump in profits to $4.8 billion in 2021 after profiting $300 million in the previous 12 months.

The bank said continued economic recovery in most territories and rising interest rates would support current-year profitability.

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Rise of COVID-19 in Hong Kong

It said if central bank interest rates rose around the world as expected, the resulting improvement in its lending margins would mean it would hit its target of a double-digit return on equity in 2023. , a year earlier than expected.

HSBC said it would repurchase up to $1 billion of its shares after concluding an existing $2 billion buyback program.

Chief Executive Noel Quinn said: “We made good progress against our strategy in 2021, which contributed to a strong financial performance supported by the global economic recovery.

“All of our regions were profitable and we saw growth in the fourth quarter of 2021 in several of our businesses.

“We have good momentum heading into 2022 and are confident that we can continue to execute our strategy. We also remain mindful of the potential impact that additional COVID-19 related uncertainty and continued inflation could have. about us and our customers.”

The bank called out COVID restrictions in Hong just days after Bill Winters, chief executive of rival Standard Chartered, said the city’s travel restrictions could hurt its status as a financial hub.

The number of daily infections in Hong Kong has risen sharply this year, hitting a record 7,533 cases on Monday, exceeding the government’s testing, hospitalization and quarantine capacities.