HSBC Holdings (NYSE:HSBC)(GB:HSBA) delivered stellar Q4 profit, reflecting higher global interest rates. The financial services giant posted an adjusted PBT (Profit before Tax) of $6.8 billion, up 92% year-over-year. At the same time, HSBC posted adjusted revenue of $15.4 billion, up 38% year-over-year.
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The economic uncertainty and high inflation led central banks across the globe to increase interest rates. This, in turn, significantly boosted the top line of banks, including HSBC.
While 2022 ended on a solid note for HSBC, its management remains confident and expects to deliver strong growth in 2023. Management’s confidence comes from a higher global interest rate environment. Moreover, HSBC expects to benefit from its transformation program aimed at driving higher returns.
Note that HSBC embarked on a transformation plan in February 2020. Under the program, it plans to achieve higher returns through the efficient use of capital. Also, it exited non-strategic assets and loss-making businesses.
HSBC expects to generate a net interest income of at least $36 billion in 2023, higher than the $32.5 billion reported in 2022. Furthermore, the firm is considering paying a special dividend of $0.21 per share once the sale of HSBC Canada is completed.
What’s the Projection for HSBC Stock?
A higher interest rate environment, investments in strengthening its capabilities in the Wealth division (especially in Asia), and focus on cost-saving measures will likely cushion its profit. However, the uncertain global economic environment could pose challenges.
HSBC stock has received eight Buy and four Hold recommendations for a Moderate Buy consensus rating on TipRanks. Analysts’ average price target of 706.67p implies 13.97% upside potential. Overall, HSBC stock has a Smart Score of eight on TipRanks, indicating it is more likely to outperform the broader market averages.
