HSBC has announced an 80 per cent profit drop in its fourth quarter which was largely driven by its stake in China’s Bank of Communications (BoCom).

Pre-tax profits for the British bank’s fourth quarter fell from $4.1 billion to $1 billion and from $5 billion for the same period in the previous year, with $3 billion of the decline due to an impairment charge in BoCom with the remainder attributable to the sale of its retail banking operations in France.

Despite the tumult, HSBC’s group chief executive Noel Quinn said the group remained confident in the resilience of the Chinese economy and the growth opportunities in mainland China over the medium to long term.

Meanwhile, HSBC announced “record” profit performance for its full year 2023 results with pre-tax profits rising by $13.3 billion to $30.3 billion.

Primarily reflecting revenue growth, HSBC said this included a favourable year-on-year impact of $2.5 billion relating to the sale of its retail banking operations in France, which completed on 1 January 2024, and a $1.6 billion provisional gain attributable to its acquisition of Silicon Valley Bank in 2023.

“We have a strong platform for growth with the opportunities that exist within our two home markets and across our international wholesale, market-leading transaction banking, and wealth management businesses,” Quinn said. “We are focused on capturing these growth opportunities, improving our earnings sustainability and targeting mid-teens returns in 2024.”

HSBC bought the UK arm of Silicon Valley Bank after its collapse due to a bank run which exposed potential weaknesses in the broader financial ecosystem and ultimately spooked investors. The rescue deal was brokered by the UK government and the Bank of England.

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