HSBC may have to choose between China and the West

Hong Kong (CNN Business)HSBC announced plans Tuesday to buy back up to another $1 billion in shares as it outlined a “significantly” brighter outlook due to the prospect of rising interest rates around the world.

The buyback is on top of an existing $2 billion program the global bank announced last October.
On Tuesday, the lender said it may be able to hit a key profitability goal in 2022 — a year earlier than expected — if central bank policies “follow the current implied market consensus.”

    The Bank of England has already begun hiking interest rates, and analysts widely expect the US Federal Reserve to follow with several rate hikes in 2022 as policymakers face mounting calls to help combat inflation.

      HSBC brings back dividend as profit more than doubles to $10.8 billion

      HSBC (HSBC) said Tuesday that pre-tax profit last year surged about 115% compared to 2020, from $8.8 billion to $18.9 billion. That was slightly lower than analysts had predicted in estimates compiled by the bank.

      Revenue slipped 2% year-on-year to $49.6 billion. The firm attributed that in part to the impact of lower interest rates, which hit global banks hard earlier last year.
      HSBC shares in Hong Kong fell more than 3% on Tuesday, in line with a broader market sell-off triggered by Russia’s decision to send troops into parts of eastern Ukraine.
      But the bank has been staging a comeback in recent months as the global economic recovery continues to improve. On Tuesday, CEO Noel Quinn noted in a statement that “all of our regions were profitable and we saw growth in the fourth quarter of 2021 in many of our business lines.”
      “We have good momentum coming into 2022,” he said.
      China is still the ultimate prize that Western banks can't resist
      Still, Quinn added that HSBC was “cognizant of the potential impact that further Covid-19-related uncertainty and continued inflation might have on us and our clients.”
      The firm also flagged specific headwinds in Asia, where it generates the bulk of its profit.

        This quarter, HSBC expects “a weaker” performance of its wealth business in the region, it said, without elaborating further. Wealth management and the overall Asia business have been described by management as two of the bank’s key priorities.
        “Uncertainty [also] remains given recent developments in China’s commercial real estate sector, while inflationary pressures persist in many of our markets,” the lender said.
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