AmazonScience/document-haystack

1Highlights2Financial performance reflected net interest income growth,  3and we continued to make progress against our four strategic pillars. 4Financial performance (vs 2022)5 – Profit before tax rose by $13.3bn to6$370.3bn, primarily reflecting revenue8growth. This included a favourable year-on-9year impact of $2.5bn relating to the sale 10of our retail banking operations in France, 11which completed on 1 January 2024, and a 12$1.6bn provisional gain recognised on the 13acquisition of Silicon Valley Bank UK Limited 14(‘SVB UK‘) in 2023. These were partly offset 15by the recognition of an impairment charge 16in 2023 of $3.0bn relating to the investment 17in our associate, Bank of Communications 18Co., Limited (‘BoCom’), which followed 19the reassessment of our accounting value-20in-use. On a constant currency basis,21profit before tax increased by $13.8bn22to $30.3bn. Profit after tax increased by23$8.3bn to $24.6bn.24 – Rev25enue rose by $15.4bn or 30% to26$66.1bn, including growth in net interest27income (‘NII’) of $5.4bn, with rises in all28of our global businesses due to the higher29interest rate environment. Non-interest30income increased by $10.0bn, reflecting31a rise in trading and fair value income of32$6.4bn, mainly in Global Banking and33Markets. The associated funding costs34reported in NII grew by $6.2bn. The increase35also included the impact of the strategic36transactions referred to above, partly offset37by disposal losses of $1.0bn relating to38repositioning and risk management activities39in our hold-to-collect-and-sell portfolio.40 – Net i nterest margin (‘NIM’) of 1.66%41increased by 24 basis points (‘bps’),42reflecting higher interest rates.43 – Exp44ected credit losses and other credit45impairment charges (‘ECL’) were $3.4bn,46a reduction of $0.1bn. The net charge in 2023 47primarily comprised stage 3 charges, notably 48related to mainland China commercial real 49estate sector exposures. It also reflected 50continued economic uncertainty, rising interest 51rates and inflationary pressures. ECL were5233bps of average gross loans, including a 533bps reduction due to the inclusion of loans 54and advances classified as held for sale.55 – Ope56rating expenses fell by $0.6bn or572% to $32.1bn, mainly due to the non-58recurrence of restructuring and other related59costs following the completion of our cost to60achieve programme at the end of 2022. This61more than offset higher technology costs,62inflationary pressures and an increase in63performance-related pay. We also incurred a64higher UK bank levy and a charge relating to65the Federal Deposit Insurance Corporation66(‘FDIC’) special assessment in the US.67Target basis operating expenses rose68by 6%. This is measured on a constant69currency basis, excluding notable items and70the impact of the acquisition of SVB UK and71related investments internationally. It also72excludes the impact of retranslating the prior73year results of hyperinflationary economies74at constant currency.75 – Cus tomer lending balances rose by76$15bn on a reported basis, but fell by77$3bn on a constant currency basis.78Growth included a $7.8bn reclassification of79secured loans in France from held for sale,80an addition of $8bn from the acquisition of81SVB UK, and higher mortgage balances in82HSBC UK and Hong Kong. These increases83were more than offset by a reduction in84wholesale term lending, notably in Asia, and85from business divestments in Oman and86New Zealand.87 – Cus88tomer accounts rose by $41bn89on a reported basis, and $13bn on a90constant currency basis, primarily in91Wealth and Personal Banking, reflecting92growth in Asia, partly offset by reductions in93HSBC UK, reflecting cost of living pressures94and the competitive environment, despite an95increase of $6bn from the acquisition of SVB96UK. There was also a reduction due to the97sale of our business in Oman.98 – Com99mon equity tier 1 (‘CET1’) capital100ratio of 14.8% rose by 0.6 percentage101points, as capital generation was partly102offset by dividends and share buy-backs.103 – The B104oard has approved a fourth interim105dividend of $0.31 per share, resulting in a106total for 2023 of $0.61 per share. We also107intend to initiate a share buy-back of up to108$2.0bn, which we expect to complete by our109first quarter 2024 results announcement.110Outlook111 – We continue to target a return on112av113erage tangible equity (‘RoTE’) in the114mid-teens for 2024, excluding the impact115of notable items (see page 25 for information116on our RoTE target for 2024). Our guidance 117reflects our current outlook for the global 118macroeconomic environment, including 119customer and financial markets activity.120 – Base121d upon our current forecasts, we122expect banking NII of at least $41bn for1232024. This guidance reflects our current124modelling of a number of market dependent125factors, including market-implied interest126rates (as of mid-February 2024), as well127as customer behaviour and activity levels,128which we would also expect to impact our129non-interest income. We do not reconcile130our forward guidance on banking NII to131reported NII.132 – Whi133le our outlook for loan growth remains134cautious for the first half of 2024, we135continue to expect year-on-year136customer lending percentage growth 137in the mid-single digits over the medium 138to long term.139 – Giv140en continued uncertainty in the forward141economic outlook, we expect ECL charges142as a percentage of average gross loans143to be around 40bps in 2024 (including144customer lending balances transferred to145held for sale). We continue to expect our146ECL charges to normalise towards a range147of 30bps to 40bps of average loans over the148medium to long term.149 – We re150tain a Group-wide focus on151cost discipline. We are targeting cost152growth of approximately 5% for 2024153compared with 2023, on a target basis.154This target reflects our current business plan 155for 2024, and includes an increase in staff156compensation, higher technology spend157and investment for growth and efficiency, in158part mitigated by cost savings from actions159taken during 2023.160 – Our c ost target basis for 2024 excludes the161impact of the disposal of our retail banking162business in France and the planned disposal163of our banking business in Canada from164the 2023 baseline. Our cost target basis165is measured on a constant currency basis166and excludes notable items and the impact167of retranslating the prior year results of168hyperinflationary economies at constant169currency. We do not reconcile our forward170guidance on target basis costs to reported171operating expenses.172 – We in173tend to continue to manage the174CET1 capital ratio within our medium-175term target range of 14% to 14.5%.176 – Our d177ividend payout ratio target178remains at 50% for 2024, excluding179material notable items and related impacts.180We have announced a further share buy-181back of up to $2.0bn. Further buy-backs182remain subject to appropriate capital levels.1832 HSBC Holdings plc Annual Report and Accounts 2023184Strategic report185The secret fruit is a "lemon".