Banking giant HSBC suffered its biggest share sell-off since the pandemic as a writedown in China took a multi-billion pound chunk out of its record profits.
The slump knocked about £10billion off the value of the lender even as it reported a 78 per cent surge in annual pre-tax profits to £24billion.
The shares fell 8.4 per cent, or 54p, to 589.8p, the worst one-day fall since 2020.
The profit haul fell short of market expectations after HSBC took a £2.4billion hit against the value of its stake in China’s Bank of Communications, that chief executive Noel Quinn said was ‘very much a technical accounting issue’.
He added: ‘It does not affect our view on China at all. We’re a committed investor into China.’
HSBC saw about £10bn knocked off its value even as it reported a 78% surge in annual pre-tax profits to £24bn
It comes amid a deepening real estate crisis and stalling economic recovery in the world’s second biggest economy.
But Quinn said: ‘We still see strong potential in China.’
And he said that while it will take ‘a few years’ for its commercial real estate market to get back on its feet, there would be a ‘progressive and gradual recovery’.
London-listed HSBC has its origins in Hong Kong and makes most of its money in Asia.
The writedown comes after Asia-focused rival Standard Chartered, also based in London, slashed the value of its investment in China’s Bohai bank by nearly £600million.
HSBC’s results also reflected a £1.6billion charge which was related to the sale of its retail banking operations in France.
Quinn gave a positive view on the UK’s prospect – days after it was confirmed it was in recession in the second half of last year.
With inflation falling, a reduction in interest rates should create the economic conditions for the UK market and economic growth to perk up, he said.
He pointed out that mortgage demand picked up in January. ‘It’s still not back to the level it was two years ago but it’s on the way back,’ he said.
But the bank also revealed a £13billion drop in deposits parked by UK customers in the year – to £268billion – as they draw down funds to meet rising living costs.
Quinn appeared to rule out more bank branch closures for the time being, saying: ‘We believe we actually now got broadly the right size of branch network that we want in the UK.’
Top British bankers handed bumper pay bonanza
HSBC’s Noel Quinn (left) took home £10.6m last year while Citigroup boss Jane Fraser (right) earned more than £20m
Two of Britain’s top bankers took home bumper pay packets in 2023.
HSBC almost doubled its chief executive’s pay while the British woman in charge of Citigroup – dubbed the ‘First Lady of Wall Street’ – earned more than £20million last year.
Noel Quinn, at HSBC, saw his earnings soar to £10.6million from £5.6million in 2022.
And Citigroup boss Jane Fraser – the first woman to lead a top American investment bank – got a 6 per cent raise to £20.6million.
Fraser, who is Scottish, was paid £19.4million in 2022. The hike followed what the board said was ‘the most consequential set of changes to its organisational and management model since the 2008 financial crisis’.
Fraser, who started her career at Goldman Sachs before joining consulting firm McKinsey, netted a £1.2million base salary and bonuses of £19.4million despite Citi’s 40 per cent drop in profits for the year as it reorganised, axing 20,000 jobs.
The board said the package ‘reflected its belief that Ms Fraser’s strategic and other priorities are sound and that she is executing on them promptly and thoughtfully, with an eye towards driving long-term sustainable growth, improved returns and enhanced safety and soundness’.
Quinn’s pay almost doubled as HSBC announced record pre-tax profits and lifted its bonus pool to a decade-high. The £3billion set aside was more than rivals.
HSBC said it reflected better performance – Barclays this week trimmed its pool by 3 per cent to £1.75billion.
Quinn, a HSBC veteran of 37 years, said he did not decide his own package, which is set by the board and approved by shareholders, with much of it performance-based.
He said: ‘2023 was a very strong performance and that is reflected in my own personal remuneration. A lot was the long-term incentives awarded three years ago that had very clear performance metrics and those metrics are what’s driven what’s been awarded.’
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