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HSBC’s pre-tax profits fell 80 per cent year on year in the final three months of 2023 as it took a $3bn charge on the value of its stake in China’s Bank of Communications, the lender said on Wednesday.

Profits for the fourth quarter declined to $1bn from $5bn a year earlier, the lender said. Its pre-tax profits for the full year rose 78 per cent to $30bn, as higher interest rates buoyed the lender, but missed analysts’ expectations of $34bn.

HSBC said the BoCom impairment was “in line with recent market-wide developments in mainland China” but that BoCom “remains a strong partner” and that HSBC’s “positive views on the medium- and long-term structural growth opportunities in mainland China are unchanged”.

It is the latest sign of how banks are taking a hit on their China exposure. In October, HSBC’s rival Standard Chartered took a $700mn impairment charge on its investment in China Bohai Bank, a mainland lender. 

The UK-based bank announced a further share buyback worth up to $2bn and said its chief executive Noel Quinn’s total pay package had jumped from £5.6mn to £10.6mn, after receiving payouts from a long-term incentive plan.

Quinn said the payouts to shareholders reflected “four years of hard work and the strength of our balance sheet in a higher interest rate environment”.

He added: “The outlook currently remains uncertain, however, and many of our customers remain concerned about their finances.”

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