occurrences

HSBC Holdings (5.HK) announced its results report for the second quarter of 2024.

reviews

24Q2 revenue and profit exceeded expectations:

Revenue was -1.0% year-on-year, higher than the agreed forecast of -3.5%, mainly due to the expected growth rate of non-interest income, of which:

Net interest income was -11.25% YoY, slightly higher than the agreed forecast of -11.31%.

Non-interest income was +11.9% YoY, higher than the consensus estimate of 5.0%.

The cost-revenue ratio increased by 1.8 pct to 43.7% year over year, better than the agreed forecast of 50.8%.

Net profit attributable to common shareholders was -3.6% year-on-year, better than the agreed forecast of -14.4%. The increase in profit was mainly due to a decrease in accruals.

24Q2 Net Interest Spread, Deposit and Loan Growth and Asset Quality:

Total customer loans were -2.2% YoY, lower than the agreed forecast of -2.0%.

Total deposits were -0.1% year over year, higher than Bloomberg's agreed forecast of -0.7%.

Accrued credit losses of $0.346 billion, a year-on-year decrease of 62.1%, less than the agreed estimate of $0.925 billion (up 1.3% year over year). The reduction in accruals stemmed from the third phase of HSBC Bank plc's global banking and capital markets business, lower anticipated credit losses in HSBC UK's commercial banking business, and lower accrual charges in the commercial real estate industry in mainland China.

NIM fell 1bp to 1.62% month-on-month, higher than the 1.50% forecast.

The non-performing loan ratio increased by 13 bps to 2.42% month-on-month, higher than the agreed forecast of 2.11%.

24Q2 Revenue split by business line:

Wealth and personal banking revenue was -1.0% year-on-year, higher than the agreed forecast of -5.6%.

Commercial finance revenue was -3.2% year-on-year, higher than the agreed forecast of -4.6%.

Global banking and capital markets revenue was +5.6% year over year, higher than the agreed forecast of +1.1%.

24Q2 CET1 Adequacy Ratio and ROE:

The core Tier 1 capital (CET1) adequacy ratio increased 0.3 pct year over year to 15.0%, lower than the agreed forecast of 15.2%.

The return on net assets (ROE) fell 0.7 pct year over year to 15.2%, higher than the consensus estimate of 13.7%.

risks

Global economic growth is high/below expectations; interest rate hikes are high/below expectations, and asset quality exceeds/falls short of expectations.