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HSBC sees two-fold increase in quarterly profit as interest rates rise

HSBC sees two-fold increase in quarterly profit as interest rates rise

A leading British-based bank, HSBC has recently observed a hike in its quarterly profit by two times i.e., double, due to the rising interest rate around the world. The bank also reported a pre-tax profit of USD 5.2 billion for the last three months of 2022, indicating a 90% rise from the same period in the previous year.

The average pre-tax profit for the year in general, however, fell by USD 1.4 billion to USD 17.5 billion, due to the sale of its French retail banking operations. HSBC is also planning to sell its business in Canada.  The money which will be raised after this sale will be used to pay the shareholders, once the deal is concluded.

Chief Executive of HSBC bank, Noel Quinn, stated that 2022 was a good year for the bank, and said that they are on the right track to deliver higher returns in 2023.

In June 2021, HSBC sold its French retail bank as part of efforts to focus on the market in Asia. Due to the sale, however, HSBC is expected to witness a hit of USD 2.4 billion to its profit. In November, the bank also agreed to sell its operations in Canada to the Royal Bank of Canada. The deal was valued at USD 10 billion and is expected to get completed at the end of this year.

HSBC has also been shedding jobs for the purpose of cost-cutting in recent years. Mr. Quinn has also hinted at more job cuts on the horizon, claiming that the bank is anticipating additional costs of USD 300 million for severance in 2023.

Many central banks around the world have raised their interest rates to deal with the rising prices. In December 2022, the Bank of England raised the interest rates to the highest levels since the last 14 years. Some other banks including European Central Bank and the US Federal Reserve have followed suit and raised borrowing costs substantially.

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