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What's going on?

HSBC the biggest bank in Europe announced impressive quarterly results on Monday.

What does this mean?

After a bumpy few months, things are finally getting back on track for HSBC: the bank made more from loans last quarter on the back of rising interest rates, while market volatility helped its trading division bring in 27% more than the same time last year. So even though it had to put aside $400 million in case recession-afflicted customers cant pay off their loans, it still earned $5 billion in pre-tax profit last quarter over $1 billion more than analysts were expecting. And with rates only set to climb, things are looking good going forward: HSBC said that every 1% rise in rates will add $4.7 billion to its net interest income. That sounded great to investors, who sent its shares up 7%.

Why should I care?

The bigger picture: Ping An is very persuasive.
HSBC has been under pressure from Chinas Ping An Insurance Group which owns nearly 10% of its shares to separate its Asian business from its Western operations, giving investors a more pure-play investment in the regions growth. Still, one of the main reasons for Ping Ans beef was HSBCs decision to stop regular dividend payments during the pandemic. But now that things seem to be on the up, HSBC has pledged to restore quarterly dividends by next year something it’s hoping will keep Ping An at bay.

Zooming out: HSBCs all in on the East.
To be fair to Ping An, HSBCs Asian business is a compelling investment, with the bank making over two-thirds of its profit from the region last quarter. Then again, HSBC has been quite deliberate about shifting its focus from elsewhere in the world: its sold off units in France, Greece, and the US, and warned on Monday that it could be cutting even more jobs soon to keep costs down.

Originally posted as part of the Finimize daily email.

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