The HSBC chief executive, Noel Quinn, has issued a grim forecast for homeowners, highlighting the impact of rising interest rates on expiring fixed mortgages.
It comes as HSBC celebrated its pre-tax profits more than doubling to £16.9billion for the first six months of this year, up from £7.2billion a year earlier.
Meanwhile, the City watchdog has warned that it will start to name and shame banks that have been profiteering by failing to raise rates for savers as fast as they have for mortgage products.
Less than 30 per cent of interest rate rises have been passed on to savers, according to the Financial Conduct Authority (FCA).
Noel Quinn, Chief Executive Officer of HSBC, taking part in a panel session, during the Net Zero Delivery Summit at the Mansion House, London on May 11, 2022
PA
The FCA has warned banks that they will be expected to justify lagging rates of face regulator intervention.
In terms of HSBC, though the Bank of England raised the interest rate from 4.5 to 5 per cent on 22 June, it was not until the 30 June that HSBC raised its easy access savings rate from 1.35 to 1.75 per cent.
The Chancellor, Jeremy Hunt MP, said: “Banks should be passing on interest rate increases to savers, and we’re keeping a close eye on whether they do. Today’s new Consumer Duty gives the regulator the tools they need to take action where that isn’t happening.”
On Thursday, the Bank of England is expected to raise rates to a new 15-year high in a bid to reduce stubbornly high inflation.
HSBC rewarded shareholders after positive financial results.
PA
Quinn said: “With more mortgage customers due to roll off fixed-term deals in the next six months, and further rate rises expected, tougher times are ahead.”
In the same breath, the bank toasted to bumper results with a $2billion (£1.6billion) shareholder remuneration in the form of a share buyback.
HSBC, which earns around two-thirds of its revenue from its Asian business, has also said it secured a provisional $1.5billion (£1.2billion) gain from its £1 purchase of Silicon Valley Bank (SVB UK) in March 2023.
Mr Quinn said: “There was good broad-based profit generation around the world, higher revenue in our global businesses driven by strong net interest income, and continued tight cost control.”
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On Thursday, the Bank of England is expected to raise rates to a new 15-year high in a bid to reduce stubbornly high inflation.
PAHe added: “I am also pleased that we can reward our shareholders with a second interim dividend of 0.10 US dollars per share and a second share buy-back in 2023 of up to 2 billion US dollars, with substantial further distribution capacity still expected ahead.”
Alice Haine, personal finance analyst at Bestinvest, told Forbes Advisor: “Savers may finally see an end to dismal savings rates offered by high street lenders thanks to the FCA’s decision to crackdown on banks and building societies for being slow to deliver better interest rate rises to their customers.”
On the economic outlook for Britain, HSBC said: “There remains a degree of uncertainty in the forward economic outlook, particularly in the UK, and we are monitoring risks related to our exposures in mainland China’s commercial real estate sector.”
The bank has reportedly ring fenced $900million (£705million) to guard against uncertainty.