HSBC Holdings PLC (LSE:HSBA) will be the latest of the major global banks to release financial results—its statement for the second quarter is due out on Monday—hot on the heels of Lloyds Banking Group PLC (LSE:LLOY), Barclays PLC (LSE:BARC) and NatWest Group PLC (LSE:NWG).
Analysts expect the bank's pre-tax profit will be somewhere in the region of US$8.4bn for the first half of the year, split almost evenly between the two first quarters of the year, down from the US$10.8bn it posted a year earlier.
Its profit before tax is predicted to be approximately US$4bn in 2Q, slightly less than US$4.2bn the prior quarter, according to market consensus.
The consensus earnings forecast for the bank is that it will make a headline pre-tax profit of US$14.7bn this year, down from US$18.9bn in 2021.
According to yearly estimates on its investor relations website, the Hong Kong-based bank has guided for its pre-tax profit to fall this year, followed by subsequent growth to decade highs.
HSBC’s share price has been buoyant this year, with its London-listed shares rising by nearly a third over the past 12 months, trailing similar gains by Standard Chartered PLC (LSE:STAN). Natwest’s share price also lifted by about a fifth, while UK banks Barclays and Lloyds’ shares fell or plateaued.
AJ Bell investment director Russ Mould and analyst Danni Hewson said the difference in market confidence, as reflected in the share price movements between the banks, may signal “hopes that China will rebound quickly, as lockdowns end and government stimulus measures kick in”, as well as fears of a UK recession.
But that could change following a week of promising results from Natwest and Lloyds, together with mixed fortunes presented by Barclays.
NatWest chief executive Alison Rose hailed a “strong” first-half performance at the bank on Friday and said it was preparing to hand back £2.2bn to investors through a bigger dividend of 3.5p, and a special pay-out of 16.8p.
On Wednesday, JP Morgan’s recession stock pick of the UK banks, Lloyds Banking Group’s shares rose 5% after it increased its guidance for 2022 on the back of a strong first half, in which its net income grew 12% to £8.45bn.
Barclays meanwhile raised its cost projections for 2022, partly over an accounting error in which it will be forced to buy back billions of dollars worth of securities it overextended in the US market.
Factors that could influence HSBC’s results next week include loan and asset impairments, as well as foreign currency exchange movements, according to analysts at AJ Bell and UBS.
The bank has previously guided for mid-single digit revenue growth in 2022, targeting US$2bn of cost savings and a tangible equity return of 10% next year, up from 8.3% in 2021, and forecasts of 5.8% for 2022.
“We do not expect a material payout in either dividend (interim dividend at 9cps, half of the 4Q21 dividend of 2021, in line with policy) or an extension to the ongoing share buyback,” UBS analysts said.
A year ago, the bank posted a dividend of US$0.07, together with an annual dividend of US$0.25 in 2021.