HSBC Profits Jump 90% as Interest Rates Rise

Banking giant HSBC is hopeful the interest rates that led to a huge jump in profits will last into this year.

The London-based bank reported earnings Tuesday (Feb. 21) that showed its profit before tax at $5.2 billion for the final quarter of 2022, up more than 90% from the same quarter in 2021.

The earnings report said this profit was a reflection of “strong reported revenue growth and lower reported operating expenses,” with revenues driven by growth in net interest income.

“Our revenue outlook remains positive,” the report said, projecting net interest income of at least $36 billion in 2023, based “on the current market consensus for global central bank rates.”

However, the bank’s pretax profit for the year declined thanks to an impairment charge tied to the planned sale of its retail banking operations in France.

HSBC is also taking a $300 million loss related to the sale of its Russian business, Reuters reported. Bank officials expect the sale to happen this year, though it still must overcome some regulatory hurdles.

Another U.K. bank, NatWest, said last week that it believes that interest rates in the country have reached their peak.

The bank said in its earnings presentation that it expects the Bank of England base rate will top out at 4% during the first quarter, stay flat through the first quarter of next year and begin to come down beginning around the half of 2024.

This follows a sharp rise in the Bank of England base rate over the last 12 months, the bank said. NatWest’s annual results showed its profit for 2022 was £5.1 billion (about $6.1 billion), up from £3.8 billion (about $4.6 billion) the year before.

“In a difficult macroeconomic environment, our strong customer franchise, disciplined risk management and robust balance sheet mean we are well positioned to support our customers,” NatWest CEO Alison Rose said when announcing the results.

Last month, the U.K.’s Competition and Markets Authority (CMA) reported that HSBC breached its open banking order.

The breach in question is connected to the Retail Banking Market Investigation Order 2017, which set the stage for open banking in the U.K. by requiring the country’s nine largest banks to make account information available to authorized parties through application programming interfaces (APIs).

In a letter to HSBC, the CMA said that the bank failed to publish the required information, or published inaccurate information, on more than 50 occasions between 2017 and 2022.

This missing and inaccurate information dealt with fees, charges and rates and eligibility criteria, impacting personal accounts, business accounts and small to medium-sized business (SMB) lending products, the CMA said.