HSBC ‘confident’ in achieving RoTE target of at least 12% for 2023 onwards

HSBC said: "We remain confident of achieving our return on average tangible equity target of at least 12% for 2023 onwards, which is not dependent on the impact of material acquisitions and disposals. Our 1Q23 annualized RoTE of 27.4% included the annualized impact of our provisional gain on the acquisition of SVB UK and the reversal of an impairment on the planned sale of our retail banking operations in France. After excluding these transactions, annualized RoTE was 19.3%. The annualized RoTE in the first quarter is likely to be higher than in other quarters due to revenue seasonality, and as we do not expect certain favorable tax impacts to recur in subsequent quarters. Based on the current market consensus for global central bank rates, our net interest income expectations are unchanged from our fullyear guidance. After including an approximately $2bn reduction due to the implementation of IFRS 17 ‘Insurance Contracts’, we expect to achieve net interest income of at least $34bn in 2023. We continue to use a range of 30bps to 40bps of average loans for planning our ECL charges over the medium to long term. While the ECL charge in 1Q23 was relatively benign, given current macroeconomic uncertainty we maintain the guidance provided at our full-year 2022 results of around 40bps of average gross loans in 2023. We continue to monitor risks related to our exposures in mainland China’s commercial real estate sector. Our current intention is to manage the CET1 ratio within our medium-term target range of 14% to 14.5%, with a dividend payout ratio of 50% for 2023 and 2024, excluding material notable items."