HSBC profits rise as interest rates rise | Business news

Britain’s HSBC posted a pre-tax profit of $6.5 billion in the third quarter of this year amid rising interest rates.

The bank’s pre-tax profit rose from $1 billion in the same period last year as it benefited from increased profits from higher interest rates.

Net interest income (the difference between what a bank earns in interest on loans and what it pays out on deposits) hit $8.6 billion at the bank in the quarter “against rising interest rates,” HSBC Group Chief Executive Noel Quinn said .

Interest income was $23 billion in the nine months to the end of September, compared with $19.7 billion in the same period a year earlier. This is a $3.3 billion increase in net interest income as a result of higher interest rates across all of HSBC’s global businesses.

Net interest income increased across HSBC’s global businesses due to higher interest rate increases.

The interest gain helped boost total pretax income above $6 billion, according to analysts’ estimates.

Interest rates were subjected to a campaign Bank of England in an attempt to restrain the spiral inflation – which show the last numbers is 10.1% – up to the target of 2%.

The bank increased interest rates up to 2.25% last monththe highest level since the 2008 financial crisis, which made debt repayments such as credit card debt and mortgage payments more expensive.

There have been signals that interest rates may be increased higher than previously expected as inflation remains stubborn high 10.1%.

Such high interest rates are expected to persist and keep net interest income high, HSBC said.

The net interest income forecast was raised to $32 billion for 2022, “based on the current market consensus on global central bank rates,” the company said in its results.

This amount will increase next year. HSBC expects net interest income of at least $36 billion in 2023.

HSBC will focus on paying an increased dividend to shareholders, Mr Quinn said. “We are focused on executing our plans and achieving a target return of at least 12% from 2023 and, as a consequence, higher distributions to our shareholders.”

“Banks benefit when interest rates rise because their net interest margin, which shows the difference between how much a bank earns in interest on loans compared to what it pays out on deposits, soars Sophie Lund-Yates, financial capital analyst said services company Hargreaves Lansdown.

“This is exactly what we saw at HSBC in the third quarter, and expectations for 2023 also include an increase in net interest income as the bank expects further rate hikes by central banks.

“However, it is not as simple as saying that the current situation is a net win for the financial sector. A rising interest rate environment makes the economic outlook very challenging and sharp financial cuts are painful for banks.”