SINGAPORE/LONDON: HSBC Holdings on Tuesday reported annual pre-tax profit more than doubled as the Asia-focused bank reversed hefty credit charges booked previously, saying it now expects to meet a key profitability goal a year ahead of schedule.
The lender reported pretax profit came in at $18.9 billion last year, up from the previous year's $8.8 billion but just below the $19.1 billion average of 17 analyst estimates compiled by HSBC itself.
The bank said that if central bank interest rates rise worldwide as expected, the resulting improvement in its lending margins would mean it hits its goal of a double-digit return on equity in 2023, a year earlier than expected.
Like global peers, HSBC, one of Europe's largest banks, is taking advantage of lower-than-expected impairment charges as its borrowers reap the benefit of government support packages in markets hit by the coronavirus pandemic, while a recovery in economies is also supporting firms.
"We have good momentum coming into 2022 and are confident that we can continue to execute against our strategy," Group Chief Executive Noel Quinn said in the results statement.
Quinn, who has run the bank on a permanent basis for the past two years, has doubled down on Asia and is investing billions of dollars in the lucrative wealth management business.
HSBC said it released $900 million in cash it had put aside in case pandemic-related bad loans spiked, as opposed to the same time a year earlier when it took a charge of $8.8 billion against expected losses.
The lender's performance was marred in the fourth quarter by a $500 million charge for expected credit losses, due in part to the downturn in China's troubled commercial real estate sector.
HSBC said it would buy back up to $1 billion of its own shares, after the conclusion of an existing $2 billion buyback programme.
(Reporting by Anshuman Daga in Singapore and Lawrence White in London; Editing by Kenneth Maxwell) ((email@example.com;))