Shares in HSBC Holdings PLC (LSE:HSBA) fell over 7% to 598p in early trading in London after Europe's biggest bank revealed fourth-quarter profits had plummeted 80% to US$1 billion.
This largely reflected a $3 billion impairment charge relating to an investment in associate Chinese bank BoCom, the sale of retail banking operations in France and a further writedown on commercial real estate.
On the plus side for investors, the board approved a fourth interim dividend of $0.31 per share, resulting in a total for 2023 of $0.61 per share, and promised a share buyback of up to $2 billion.
For the full year, revenue rose 30% to $66.1 billion and pre-tax profits almost 80% to $30.3 billion.
Chief executive Noel Quinn said this was a record performance, which "enabled us to reward our shareholders with our highest full-year dividend since 2008, three share buy-backs last year totalling $7bn, and a further share buy-back of up to $2bn.
"This reflected four years of hard work and the strength of our balance sheet in a higher interest rate environment."
Profit was boosted by $2.5 billion relating to the French sale, which was completed on 1 January 2024, and a $1.6 billion provisional gain recognised on the acquisition of Silicon Valley Bank UK Limited in 2023, partly offset by Chinese impairment charges.
Net interest margin increased by 24 basis points to 1.66%, reflecting higher interest rates.
"Mainland China remains a question mark," said analyst Matt Britzman at Hargreaves Lansdown, with HSBC's write-down of Chinese associate BoCom and the Chinese commercial real estate sector continuing to be weak.
The outlook is "messy", he said, with returns expected in the mid-teens once some one-off bits are taken out, costs are forecast to rise 5% and loan loss levels are expected to tick higher.
"Overall, that paints a mixed underlying picture that looks to be a little worse than the current consensus has built in."