During the period covered by the results, HSBC’s UK business bought the UK arm of Silicon Valley Bank as part of a rescue of the embattled SVB group. It has also sold its retail banking arm in France to My Money Group and its Canadian business to Royal Bank of Canada. HSBC has also launched a high net worth and ultra-HNW business for India, tapping into the rising wealth of that country.
In other details, HSBC said expected credit losses and other credit impairment charges, of $1.3 billion in the half-year period, reflected a more stable outlook in most markets, it said.
One of the drivers of the overall bank result was a 38 per cent surge in net interest income – benefiting from higher central bank interest rates – to $9.3 billion in the three months to end-June from a year earlier.
The H1 2023 charge included $300 million relating to the commercial real estate sector in mainland China and charges in commercial banking in the UK. The charge of $1.1 billion in the same period a year ago, which reflected heightened economic uncertainty, mainly due to the Russia-Ukraine war and inflationary pressures, included $300 million linked to the commercial real estate sector in mainland China, partly offset by releases of Covid-19-related allowances.
Net new invested assets (NNIA) fell to $34 billion in H1 2023, from $39 billion a year earlier, mainly caused by liquidity outflows in the US.
At the end of June, HSBC said its common equity tier 1 capital ratio was 14.7 per cent – an increase of 0.5 percentage points compared with Q4 2022. It was driven by capital generation net of the dividend accrual, and included an approximately 0.3 percentage point impact from the reversal of an impairment on the planned sale of HSBC’s retail banking operations in France and the provisional gain on the acquisition of Silicon Valley Bank UK. The liquidity coverage ratio was 132 per cent at the end of June, unchanged from the first quarter. (The ratio is the requirement whereby banks must hold a sufficient amount of high-quality liquid assets to fund cash outflows for 30 days.)