HSBC quarterly profits tumble 80% after $3bn charge on Chinese bank stake

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HSBC’s pre-tax profits fell 80 per cent year on year in the final three months of 2023 as it took a $3bn charge on the value of its stake in China’s Bank of Communications, the lender said on Wednesday.

Profits for the fourth quarter declined to $1bn from $5bn a year earlier, the lender said. Its pre-tax profits for the full year rose 78 per cent to $30bn, as higher interest rates buoyed the lender, but missed analysts’ expectations of $34bn.

HSBC said the BoCom impairment was “in line with recent market-wide developments in mainland China” but that BoCom “remains a strong partner”. The UK-based lender, which earns most of its profits in Asia and holds a 19 per cent stake in the Chinese bank, said its “positive views on the medium- and long-term structural growth opportunities in mainland China are unchanged”.

HSBC’s Hong Kong-listed shares fell as much as 3.8 per cent on Wednesday after the earnings release.

The results underscore how banks are taking a hit on their China exposure as growth slows in the world’s second-biggest economy. In October, HSBC’s rival Standard Chartered took a $700mn impairment charge on its investment in China Bohai Bank, a mainland lender. 

HSBC made $3.4bn in provisions to cover expected credit losses for the full year and said $1bn of this was due to its exposure to commercial property in mainland China, where the sector has been in crisis.

The bank said its chief executive Noel Quinn’s total pay package had jumped from £5.6mn to £10.6mn because of payouts from a long-term incentive plan.

The size of the payment reflected Quinn’s “leadership in reshaping the [bank] to deliver more sustainable returns to shareholders”, HSBC said, though it noted that it took Quinn’s pay to 169 times that of the average UK HSBC employee, up from 95 times last year. The bank’s total bonus pool…