Reports

HSBC's Wealth, Personal Banking Arm Logs Sharp Profit Gain

Tom Burroughes, Group Editor, London, 22 February 2022

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The wealth and personal banking division of the bank reported a broadly stronger set of financial results for 2021, including its inflows and profits. Net operating costs held steady.

HSBC today said that its wealth and personal banking arm, which includes private banking, logged adjusted pre-tax profit of $7.048 billion in 2021, rising sharply from $4.13 billion a year ago as global economic conditions improved. Adjusted total pre-tax profit stood at $21.92 billion for the whole HSBC group, up from $12.271 billion.

The UK/Hong Kong-listed group said that last year, the wealth and personal banking side booked net operating costs of $15.384 billion, against $15.443 billion a year earlier in 2020. This division of the bank provided for $3.005 billion in expected credit losses and impairments, but swung into a net release of $288 million last year, helped by the COVID-19 crisis easing.

The group said its WPB arm logged $1.67 trillion of reported wealth balances last year, up from $1.59 billion in 2020, helped by a total of $64 billion net new invested assets in 2021, up from $53 billion. Within wealth and personal banking asset management, funds under management rose to $630 billion from $602 billion. In the Asia WPB business specifically, wealth revenue rose to $5.8 billion from $5.2 billion.

Across the whole of HSBC, Asia made up the biggest source of profit, underscoring the bank’s standing as an Asian bank, with reported pre-tax profit of $12.249 billion, or 64.8 per cent of the total. Europe made up 20 per cent, the Middle East and North Africa 7.5 per cent, North America 7.3 per cent and Latin America 0.4 per cent, it said in a statement today.

“We made good progress against our strategy in 2021, which contributed to a strong financial performance that was supported by the global economic recovery. All of our regions were profitable and we saw growth in the fourth quarter of 2021 in many of our business lines,” Noel Quinn, HSBC’s group chief executive, said. “We have good momentum coming into 2022 and are confident that we can continue to execute against our strategy. We also remain cognisant of the potential impact that further COVID-19-related uncertainty and continued inflation might have on us and our clients.”

Across the whole banking group, reported revenue dipped 2 per cent year-on-year to $49.6 billion, reflecting the squeeze caused in 2021 by lower global interest rates and a fall in revenues in the markets and securities services arm that contrasted with a strong comparative period a year ago. 

The bank said it had a Common Equity Tier 1 ratio – a standard international measure of a bank’s capital buffer – of 15.8 per cent. The bank said its capital generation last year was more than offset by dividend payments.

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