HSBC said Wednesday it achieved "record profit" in 2023 as pre-tax gains soared by nearly 80 percent, with the banking giant also announcing further share buybacks.

The Asia-focused lender and its peers have been buoyed by rising interest rates for more than a year, but are bracing for greater economic uncertainties in 2024.

The bank generates most of its revenue in Asia and has spent several years pivoting to the region, vowing to develop its wealth business and target fast-growing markets.

Despite bumper profits, HSBC noted the effects of China's slower-than-expected economic recovery after the Covid-19 pandemic as well as heightened geopolitical tensions.

The firm reported pre-tax profits of $30.3 billion, up from $17.1 billion the year before, in a statement to the Hong Kong stock exchange.

Profit after tax increased by $8.3 billion, to $24.6 billion, while revenue rose by 30 percent to $66.1 billion.

"Our record profit performance in 2023 enabled us to reward our shareholders with our highest full-year dividend since 2008," said chief executive Noel Quinn.

"This reflected four years of hard work and the strength of our balance sheet in a higher interest rate environment."

The bank said Wednesday that it would initiate a share buyback of up to $2 billion, following the announcement last year of three share buybacks totalling $7 billion.

It also announced a fourth quarterly dividend of $0.31 per share, bringing the total dividend for 2023 to $0.61 per share.

HSBC said the profits included a "favourable year-on-year impact" of $2.5 billion due to the sale of its French retail banking operations, as well as a $1.6 billion provisional gain recognised on its acquisition of Silicon Valley Bank UK.

The profits were partly offset by a $3 billion impairment charge related to its holding in China's Bank of Communications -- which helped tank HSBC's fourth-quarter profits by 80 percent to $1 billion.

HSBC said it maintains a 19 percent interest in the Bank of Communications, adding that the Shanghai-based lender "remains a strong partner in China, and we remain focused on maximising the mutual value of our partnership".

Quinn told Bloomberg the impairment charge was a "technical accounting issue" and had no impact on HSBC's capital position.

Shares of HSBC in Hong Kong dipped by nearly four percent at the close on Wednesday.

- 'Confident' in China's economy -

Quinn said the bank remains "confident in the resilience of the Chinese economy, and the growth opportunities in mainland China over the medium to long term".

Group chairman Mark Tucker noted that China's recovery after reopening was "bumpier than expected", and that the five percent growth target of the world's second-largest economy is expected to be maintained this year.

HSBC reported expected credit losses of $3.4 billion in 2023, which included charges "notably related to mainland China commercial real estate exposures".

China's property market woes have continued to weigh down the country's economic growth, with the most debt-ridden developer Evergrande recently handed a liquidation order in a Hong Kong court.

Bloomberg Intelligence analyst Tomasz Noetzel told the financial newswire that HSBC's impairment charge related to Bank of Communications "appears to rightly capture the deteriorating outlook for China's economy and shouldn't be a surprise".

HSBC forecasted a net interest income of at least $41 billion in 2024, while it continued to target a return on average tangible equity in the mid-teens.

"While our outlook for loan growth remains cautious for the first half of 2024, we continue to expect year-on-year customer lending percentage growth in the mid-single digits over the medium to long term," the bank added.




China Evergrande Group