Finance

The Rivian name is shown on one of their new electric SUV vehicles in San Diego, U.S., December 16, 2022.
Mike Blake | Reuters

Check out the companies making headlines in midday trading.
Toyota Motor — Shares rose 2.1%, hitting a new 52-week high, after the company reported a revenue beat in the fiscal first quarter. Toyota posted operating income of 1.12 million yen ($7.84 billion), which was 94% higher than a year prior. Analysts polled by Refinitiv had expected 9.878 trillion yen.

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Coinbase – Shares of the crypto exchange dropped 4.5% after a federal judge said some crypto assets are securities regardless of the context in which they are sold. The opinion came from the same Manhattan federal court that handed down a controversial ruling in the Securities and Exchange’s suit against Ripple in July, which said the opposite in the case of Ripple’s XRP token and gave investors optimism that Coinbase might prevail in its own battle with the SEC.
ResMed — The health technology stock advanced 1.3% after RBC upgraded shares to outperform, citing an appealing risk-reward profile.
Gap, American Eagle— Shares of Gap were up 3.1% after Barclays upgraded the stock to overweight from equal weight. Analyst Adrienne Yih assigned a $13 price target to the company, which suggests shares could rally 26.2% from Monday’s close. Barclays also upgraded retailer American Eagle, which gained 4.2%.
DoorDash — Shares tumbled 4.6% ahead of the company’s quarterly earnings announcement Wednesday after the bell.
ZoomInfo Technologies – Shares tumbled almost 27% after the data company reported a weak revenue outlook for the third quarter in its financial update late Monday. ZoomInfo forecast $309 million to $312 million in revenue for the quarter. Analysts expect $326 million, according to Refinitiv. The company also missed revenue expectations for the most recent quarter.

JetBlue Airways – The airline saw shares fell more than 8% after it cut its 2023 outlook and warned of a potential loss in the current quarter, pointing to challenges from a shift toward international travel and the the end of its partnership with American Airlines in the Northeast. Earnings and revenue for the second quarter were in line with analysts’ estimates.
Zebra Technologies — The stock slid more than 17% after the company posted disappointing results for the second quarter. While earnings topped analyst estimates, revenue came below expectations. The company’s third-quarter earnings guidance of 60 cents to $1 also missed analyst estimates of $3.76 earnings per share from FactSet. 
Norwegian Cruise Line Holdings, Carnival — Shares of Norwegian Cruise Line plunged 12% Tuesday. While the company posted an earnings and revenue beat in the second quarter, its third-quarter guidance missed analyst estimates. Carnival’s shares also shed 5.7% in tandem.
Rockwell Automation — The industrial automation company’s stock fell 7.5% after a disappointing earnings report. The company reported $3.01 earnings per share and revenue of $2.24 billion. Analysts had estimated $3.18 earnings per share on $2.34 billion in revenue, according to FactSet. 
Monolithic Power Systems — The semiconductor-based electronics company’s stock lost 1.6% following its earnings announcement Monday after the bell. Despite reporting better-than-expected earnings and revenue in the second quarter, its third-quarter revenue guidance was lower than analysts were expecting.
Molson Coors Beverage — Shares fell 4.6l% after the brewing and beverage company reported mixed quarterly results before the bell. Its second-quarter revenue of $3.27 billion fell short of the $3.29 billion expected from analysts polled by StreetAccount. Adjusted earnings per share, however, topped expectations.
Leidos Holdings — The defense solutions company’s shares rallied 6.9% after its second-quarter results topped analyst estimates. The company posted $1.80 earnings per share on $3.84 billion in revenue. Analysts polled by FactSet had expected $1.57 earnings per share on $3.72 billion in revenue. 
Eaton Corporation — The power management company’s shares increased 6.6% after beating analyst expectations on both earnings and revenue in the second quarter. The company’s full-year earnings guidance also came above estimates. 
Global Payments — Shares jumped 9.5% following the company’s second-quarter earnings announcement. Global Payments reported $2.62 adjusted earnings per share on $2.2 billion in adjusted net revenue. Meanwhile, analysts had estimated $2.59 earnings per share on $2.19 billion in revenue, according to FactSet. 
— CNBC’s Alexander Harring, Yun Li, Pia Singh, Tanaya Macheel, Michelle Fox and Sarah Min contributed reporting More

Stockmarkets, the economist Paul Samuelson once quipped, have predicted nine out of the last five recessions. Today they stand accused of crying wolf yet again. Pessimism seized trading floors around the world in 2022, as asset prices plunged, consumers howled and recessions seemed all but inevitable. Yet so far Germany is the only big economy to have actually experienced one—and a mild one at that. In a growing number of countries, it is now easier to imagine a “soft landing”, in which central bankers succeed in quelling inflation without quashing growth. Markets, accordingly, have spent months in party mode. Taking the summer lull as a chance to reflect on the year so far, here are some of the things investors have learned.The Fed was serious…Interest-rate expectations began the year in an odd place. The Federal Reserve had spent the previous nine months tightening its monetary policy at the quickest pace since the 1980s. And yet investors remained stubbornly unconvinced of the central bank’s hawkishness. At the start of 2023, market prices implied that rates would peak below 5% in the first half of the year, then the Fed would start cutting. The central bank’s officials, in contrast, thought rates would finish the year above 5% and that cuts would not follow until 2024.The officials eventually prevailed. By continuing to raise rates even during a miniature banking crisis (see below), the Fed at last convinced investors it was serious about curbing inflation. The market now expects the Fed’s benchmark rate to finish the year at 5.4%, only marginally below the central bankers’ own median projection. That is a big win for a central bank whose earlier, flat-footed reaction to rising prices had damaged its credibility.…yet borrowers are mostly weathering the stormDuring the cheap-money years, the prospect of sharply higher borrowing costs sometimes seemed like the abominable snowman: terrifying but hard to believe in. The snowman’s arrival has thus been a double surprise. Higher interest rates have proved all-too-real but not-so-scary. Since the start of 2022, the average interest rate on an index of the riskiest (or “junk”) debt owed by American firms has risen from 4.4% to 8.1%. Few, though, have gone broke. The default rate for high-yield borrowers has risen over the past 12 months, but only to around 3%. That is much lower than in previous times of stress. After the global financial crisis of 2007-09, for instance, the default rate rose above 14%.This might just mean that the worst is yet to come. Many firms are still running down cash buffers built up during the pandemic and relying on dirt-cheap debt fixed before rates started rising. Yet there is reason for hope. Interest-coverage ratios for junk borrowers, which compare profits to interest costs, are close to their healthiest level in 20 years. Rising rates might make life more difficult for borrowers, but they have not yet made it dangerous.Not every bank failure means a return to 2008In the panic-stricken weeks that followed the implosion of Silicon Valley Bank, a mid-tier American lender, on March 10th, events started to feel horribly familiar. The collapse was followed by runs on other regional banks (Signature Bank and First Republic Bank also buckled) and, seemingly, by global contagion. Credit Suisse, a 167-year-old Swiss investment bank, was forced into a shotgun marriage with its long-time rival, ubs. At one point it looked as if Deutsche Bank, a German lender, was also teetering.Mercifully a full-blown financial crisis was averted. Since First Republic’s failure on May 1st, no more banks have fallen. Stockmarkets shrugged off the damage within a matter of weeks, although the kbw index of American banking shares is still down by about 20% since the start of March. Fears of a long-lasting credit crunch have not come true.Yet this happy outcome was far from costless. America’s bank failures were stemmed by a vast, improvised bail-out package from the Fed. One implication is that even mid-sized lenders are now deemed “too big to fail”. This could encourage such banks to indulge in reckless risk-taking, under the assumption that the central bank will patch them up if it goes wrong. The forced takeover of Credit Suisse (on which ubs shareholders were not given a vote) bypassed a painstakingly drawn-up “resolution” plan detailing how regulators are supposed to deal with a failing bank. Officials swear by such rules in peacetime, then forswear them in a crisis. One of the oldest problems in finance still lacks a widely accepted solution.Stock investors are betting big on big tech—againLast year was a humbling time for investors in America’s tech giants. These firms began 2022 looking positively unassailable: just five firms (Alphabet, Amazon, Apple, Microsoft and Tesla) made up nearly a quarter of the value of the s&p 500 index. But rising interest rates hobbled them. Over the course of the year the same five firms fell in value by 38%, while the rest of the index dropped by just 15%.Now the behemoths are back. Joined by two others, Meta and Nvidia, the “magnificent seven” dominated America’s stockmarket returns in the first half of this year. Their share prices soared so much that, by July, they accounted for more than 60% of the value of the nasdaq 100 index, prompting Nasdaq to scale back their weights to prevent the index from becoming top-heavy. This big tech boom reflects investors’ enormous enthusiasm for artificial intelligence, and their more recent conviction that the biggest firms are best placed to capitalise on it.An inverted yield curve does not spell immediate doomThe stockmarket rally means that it is now bond investors who find themselves predicting a recession that has yet to arrive. Yields on long-dated bonds typically exceed those on short-dated ones, compensating longer-term lenders for the greater risks they face. But since last October, the yield curve has been “inverted”: short-term rates have been above long-term ones (see chart). This is financial markets’ surest signal of impending recession. The thinking is roughly as follows. If short-term rates are high, it is presumably because the Fed has tightened monetary policy to slow the economy and curb inflation. And if long-term rates are low, it suggests the Fed will eventually succeed, inducing a recession that will require it to cut interest rates in the more distant future. This inversion (measured by the difference between ten-year and three-month Treasury yields) had only happened eight times previously in the past 50 years. Each occasion was followed by recession. Sure enough, when the latest inversion started in October, the s&p 500 reached a new low for the year.Since then, however, both the economy and the stockmarket have seemingly defied gravity. That hardly makes it time to relax: something else may yet break before inflation has fallen enough for the Fed to start cutting rates. But there is also a growing possibility that a seemingly foolproof indicator has misfired. In a year of surprises, that would be the best one of all. ■ More

Stockmarkets, the economist Paul Samuelson once quipped, have predicted nine out of the last five recessions. Today they stand accused of crying wolf yet again. Pessimism seized trading floors around the world in 2022, as asset prices plunged, consumers howled and recessions seemed all but inevitable. Yet so far Germany is the only big economy to have actually experienced one—and a mild one at that. In a growing number of countries, it is now easier to imagine a “soft landing”, in which central bankers succeed in quelling inflation without quashing growth. Markets, accordingly, have spent months in party mode. Taking the summer lull as a chance to reflect on the year so far, here are some of the things investors have learned.The Fed was serious…Interest-rate expectations began the year in an odd place. The Federal Reserve had spent the previous nine months tightening its monetary policy at the quickest pace since the 1980s. And yet investors remained stubbornly unconvinced of the central bank’s hawkishness. At the start of 2023, market prices implied that rates would peak below 5% in the first half of the year, then the Fed would start cutting. The central bank’s officials, in contrast, thought rates would finish the year above 5% and that cuts would not follow until 2024.The officials eventually prevailed. By continuing to raise rates even during a miniature banking crisis (see below), the Fed at last convinced investors it was serious about curbing inflation. The market now expects the Fed’s benchmark rate to finish the year at 5.4%, only marginally below the central bankers’ own median projection. That is a big win for a central bank whose earlier, flat-footed reaction to rising prices had damaged its credibility.…yet borrowers are mostly weathering the stormDuring the cheap-money years, the prospect of sharply higher borrowing costs sometimes seemed like the abominable snowman: terrifying but hard to believe in. The snowman’s arrival has thus been a double surprise. Higher interest rates have proved all-too-real but not-so-scary. Since the start of 2022, the average interest rate on an index of the riskiest (or “junk”) debt owed by American firms has risen from 4.4% to 8.1%. Few, though, have gone broke. The default rate for high-yield borrowers has risen over the past 12 months, but only to around 3%. That is much lower than in previous times of stress. After the global financial crisis of 2007-09, for instance, the default rate rose above 14%.This might just mean that the worst is yet to come. Many firms are still running down cash buffers built up during the pandemic and relying on dirt-cheap debt fixed before rates started rising. Yet there is reason for hope. Interest-coverage ratios for junk borrowers, which compare profits to interest costs, are close to their healthiest level in 20 years. Rising rates might make life more difficult for borrowers, but they have not yet made it dangerous.Not every bank failure means a return to 2008In the panic-stricken weeks that followed the implosion of Silicon Valley Bank, a mid-tier American lender, on March 10th, events started to feel horribly familiar. The collapse was followed by runs on other regional banks (Signature Bank and First Republic Bank also buckled) and, seemingly, by global contagion. Credit Suisse, a 167-year-old Swiss investment bank, was forced into a shotgun marriage with its long-time rival, ubs. At one point it looked as if Deutsche Bank, a German lender, was also teetering.Mercifully a full-blown financial crisis was averted. Since First Republic’s failure on May 1st, no more banks have fallen. Stockmarkets shrugged off the damage within a matter of weeks, although the kbw index of American banking shares is still down by about 20% since the start of March. Fears of a long-lasting credit crunch have not come true.Yet this happy outcome was far from costless. America’s bank failures were stemmed by a vast, improvised bail-out package from the Fed. One implication is that even mid-sized lenders are now deemed “too big to fail”. This could encourage such banks to indulge in reckless risk-taking, under the assumption that the central bank will patch them up if it goes wrong. The forced takeover of Credit Suisse (on which ubs shareholders were not given a vote) bypassed a painstakingly drawn-up “resolution” plan detailing how regulators are supposed to deal with a failing bank. Officials swear by such rules in peacetime, then forswear them in a crisis. One of the oldest problems in finance still lacks a widely accepted solution.Stock investors are betting big on big tech—againLast year was a humbling time for investors in America’s tech giants. These firms began 2022 looking positively unassailable: just five firms (Alphabet, Amazon, Apple, Microsoft and Tesla) made up nearly a quarter of the value of the s&p 500 index. But rising interest rates hobbled them. Over the course of the year the same five firms fell in value by 38%, while the rest of the index dropped by just 15%.Now the behemoths are back. Joined by two others, Meta and Nvidia, the “magnificent seven” dominated America’s stockmarket returns in the first half of this year. Their share prices soared so much that, by July, they accounted for more than 60% of the value of the nasdaq 100 index, prompting Nasdaq to scale back their weights to prevent the index from becoming top-heavy. This big tech boom reflects investors’ enormous enthusiasm for artificial intelligence, and their more recent conviction that the biggest firms are best placed to capitalise on it.An inverted yield curve does not spell immediate doomThe stockmarket rally means that it is now bond investors who find themselves predicting a recession that has yet to arrive. Yields on long-dated bonds typically exceed those on short-dated ones, compensating longer-term lenders for the greater risks they face. But since last October, the yield curve has been “inverted”: short-term rates have been above long-term ones (see chart). This is financial markets’ surest signal of impending recession. The thinking is roughly as follows. If short-term rates are high, it is presumably because the Fed has tightened monetary policy to slow the economy and curb inflation. And if long-term rates are low, it suggests the Fed will eventually succeed, inducing a recession that will require it to cut interest rates in the more distant future. This inversion (measured by the difference between ten-year and three-month Treasury yields) had only happened eight times previously in the past 50 years. Each occasion was followed by recession. Sure enough, when the latest inversion started in October, the s&p 500 reached a new low for the year.Since then, however, both the economy and the stockmarket have seemingly defied gravity. That hardly makes it time to relax: something else may yet break before inflation has fallen enough for the Fed to start cutting rates. But there is also a growing possibility that a seemingly foolproof indicator has misfired. In a year of surprises, that would be the best one of all. ■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More

Cryptocurrencies are considered securities regardless of the context in which they are sold, a federal judge said.
The opinion came from the same Manhattan federal court that handed down a controversial ruling involving a crypto asset called Ripple that said the opposite.
Private companies, lawmakers, and regulators have tussled over whether cryptocurrencies are considered securities.

Hon Chang-joon, business partner of Do Kwon, the cryptocurrency entrepreneur who created the failed Terra (UST) stablecoin, is taken to court in Podgorica, Montenegro, March 24, 2023. 
Stevo Vasiljevic | Reuters

Cryptocurrencies are considered securities regardless of how they are sold, a Manhattan federal judge said in an opinion, allowing the Securities and Exchange Commission to pursue securities charges against Terraform Labs and its founder Do Kwon.
The opinion, issued by U.S. District Judge Jed Rakoff on Monday, contradicts an earlier ruling from the same district court that said Ripple, another cryptocurrency, may not be categorized as a security in all circumstances. It will not impact the prior opinion.

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The judge’s decision, part of litigation between the SEC and Kwon, will likely inform any appeals made between the federal financial regulator and private sector crypto firms under government scrutiny, including Ripple.
Kwon and Terraform Labs are accused of committing a massive fraud upon investors through the unregistered offer and sale of multiple cryptoassets, including Luna and a stablecoin called TerraUSD.
“The Court declines to draw a distinction between these coins based on their manner of sale, such that coins sold directly to institutional investors are considered securities and those sold through secondary market transactions to retail investors are not,” Rakoff said of the prior ruling in the case. “In doing so, the Court rejects the approach recently adopted by another judge of this district in a similar case.”
Shares of crypto exchange Coinbase are down about 3% in pre-market trading.
The SEC has pursued numerous other crypto firms over the alleged unregistered offer and sale of securities, including Coinbase, Gemini and Genesis.
CNBC’s Lora Kolodny contributed to this report. More

People walk by a Gap retail store on August 24, 2022 in Beijing, China.
VCG | Getty Images

Check out the companies making headlines before the bell on Tuesday.
SoFi Technologies — The financial technology stock dropped 3.7% after KBW analyst Michael Perito downgraded the stock from underperform from market perform. Perito hiked his price target for shares by $2 to $7.50, however, which still implies shares can fall 34.5% from Monday’s closing price. 

Estee Lauder — The beauty stock shed 1.1% following a Barclays downgrade to neutral from buy. The firm said difficulties in China could weigh on the business in the near-term.
Gap — The retail stock climbed nearly 4% after Barclays upgraded Gap to overweight from equal weight. Analyst Adrienne Yih assigned a $13 price target to the company, which suggests shares could rally 26.2% from Monday’s close. The firm also upgraded retailers American Eagle, Bath & Body Works and Tapestry to overweight. Each of those are up more than 2% in early morning trading.
Incyte — Shares rose 2% after Incyte beat analysts’ expectations in its latest results. The pharmaceutical company reported second-quarter revenue of $954.6 million, exceeding the FactSet consensus estimate of $909.7 million. Per-share adjusted earnings came in at $0.99, higher than the forecasted $0.72 per share. CEO Herve Hoppenot cited double-digit growth in Jakafi (ruxolitinib), a treatment for blood cancer.
Uber — Shares of the ride-hailing giant rose more than 2% in premarket trading after the company reported second-quarter results that missed analysts’ expectations for revenue but offered rosy guidance for the third quarter. CEO Dara Khosrowshahi said the company achieved two major milestones during the quarter: its first quarter of free cash flow over $1 billion and its first GAAP operating profit. 
Caterpillar — Shares of the manufacturing company gained 1.4% after reporting better-than-expected earnings and revenue. Caterpillar warned of potential decline in sales and margins for the third quarter, however.

Merck — Shares of the pharmaceutical giant rose nearly 2% premarket after the company reported second-quarter revenue that topped expectations, driven by sales of its blockbuster cancer drug Keytruda and HPV vaccine Gardasil. Merck also posted a narrower than expected loss for the quarter.
Pfizer — The stock shed more than 1% in early morning trading after Pfizer reported second-quarter adjusted revenue that beat expectations but posted revenue that fell short of Wall Street’s estimates. The company’s revenue miss was caused by a decline in Covid product sales.
ZoomInfo Technologies — Shares sank by nearly 20% in premarket trading after the data company reported a weak outlook for third-quarter revenue. ZoomInfo, which posted results after Monday’s close, said it anticipates $309 million to $312 million in revenue, falling short of analysts’ expectations of $326 million as gauged by Refinitiv. ZoomInfo’s revenue in the latest quarter also missed expectations, coming in at $309 million, while analysts estimated $311 million.
Toyota Motor — The automaker added about 2% after reporting operating income of 1.12 million yen ($7.84 billion) for the fiscal first quarter, 94% higher than a year prior. That topped the 9.878 trillion yen expected from analysts polled by Refinitiv.
Arista Networks — Shares advanced 13.6% in premarket trading after the company reported after the bell Monday that its quarterly earnings topped analysts’ expectations. Arista posted adjusted earnings of $1.58 per share, versus consensus analyst estimates of $1.44 per share, according to Refinitiv. Revenue also came in higher than expected at $1.46 billion, compared to analyst expectations of $1.38 billion.
— CNBC’s Tanaya Macheel, Alex Harring, Yun Li, Sarah Min, and Michelle Fox Theobald contributed reporting. More

Signage outside the State Street Corp. Global Advisors Global Advisors building in Boston, Massachusetts, U.S., on Tuesday, Jan. 18, 2022.
Scott Eisen | Bloomberg | Getty Images

Asset management giant State Street is reducing the fees investors pay for a group of core ETFs, the company announced Tuesday.
The changes impact roughly half of the SPDR Portfolio ETF suite, including funds focused on U.S. stocks, foreign stocks and fixed income. Combined, the 10 funds hold about $77 billion in assets, according to FactSet. The changes take effect Aug. 1.

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The biggest fund seeing an expense cut is the SPDR Portfolio S&P 500 ETF (SPLG), with roughly $20 billion in assets under management.

SPDR ETF expense cuts

Fund Ticker
Category
Previous total expense ratio
New TER

SPLG
S&P 500
0.03%
0.02%

SPMD
S&P 400 mid cap
0.05%
0.03%

SPSM
S&P 600 small cap
0.05%
0.03%

SPDW
Developed world ex-US
0.04%
0.03%

SPEU
Europe
0.09%
0.07%

SPEM
Emerging markets
0.11%
0.07%

SPTS
Short term Treasury
0.06%
0.03%

SPTI
Intermediate term Treasury
0.06%
0.03%

SPTL
Long term Treasury
0.06%
0.03%

SPHY
High yield Bond
0.10%
0.05%

Source: State Street Global Advisors

“We look at the fees on a pretty consistent basis, and one of the things that we know is that as funds achieve scale it gives us extra room to be able to make [total expense ratio] reductions. And this has been a very successful lineup for us,” said Sue Thompson, head of SPDR Americas distribution at State Street Global Advisors.
The portfolio suite of ETF is aimed at smaller investors focused on long-term ownership, Thompson said. The funds have lower per-share prices than similar funds, such as the SPDR S&P 500 Trust (SPY), which can make it easier for investors to build out a full portfolio when buying full shares of the funds.
The SPY, which is used as a trading vehicle by many institutional investors, has an expense ratio of 0.0945% and trades around $450 per share. The SPLG will now have an expense ratio of just 0.02% and a per share price of close to $50.
Fund costs have been trending lower in recent decades for all asset managers, as the ETF industry grows in size and pulls assets from higher cost mutual funds. Some firms even offer products with a sticker price of zero for the expense ratio, such as the BNY Mellon Large Cap Core Equity ETF (BKLC).

Thompson said she does not see the SPDR fund expenses ever getting to zero “because of the real costs that are involved in running these funds,” but said the firm does plan to continue to share the savings from the scale of its products with customers.
“When you look at where expense ratios were 15 years ago across the board to today, this has been a massive win for investors. It has been a massive win for smaller investors,” Thompson said. More

HSBC’s net profit more than doubled to $18.1 billion in the six months ended June, a sharp spike compared to the $9 billion in the same period a year before.
The bank’s profit before tax rose 147% year-on-year to $21.7 billion, up from $8.78 billion in the first half of 2022.
In light of the strong results, HSBC’s board approved a second interim dividend of $0.10 per share, and announced a further share buyback of up to $2 billion, which “we expect to commence shortly and complete within three months.”

HSBC’s net profit more than doubled to $18.1 billion in the six months ended June, a sharp spike compared to the $9 billion in the same period a year before.
The bank’s profit before tax rose 147% year-on-year to $21.7 billion, up from $8.78 billion in the first half of 2022.

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This figure included a $2.1 billion reversal of an impairment relating to the planned sale of its retail banking operations in France, as well as a provisional gain of $1.5 billion on the acquisition of Silicon Valley Bank UK.
In light of the strong results, HSBC’s board approved a second interim dividend of $0.10 per share, and announced a further share buyback of up to $2 billion, which “we expect to commence shortly and complete within three months.”

An HSBC Holdings bank branch in Hong Kong on May 24, 2022. A Hong Kong-based trade platform launched by HSBC Holdings three years ago with much fanfare has shut down after failing to build a commercially viable business.
Bertha Wang | Bloomberg | Getty Images

Asked when the bank’s dividend might return to pre-pandemic levels, CEO Noel Quinn told CNBC’s “Capital Connection” that “if all goes to plan this year, we should be above our pre-pandemic dividend level.”
HSBC paid out a total dividend of $0.51 in 2018, and $0.30 in 2019.
For 2022, the bank has already declared two interim dividends of $0.10 each, bringing the total amount of dividends paid to $0.20. Quinn said that “our final interim dividend at the end of the year, will be the balance to get us to a 50% payout ratio.”

In March, the U.K. arm of HSBC — Europe’s largest bank by assets — bought SVB U.K. for £1 ($1.21), in a deal that excludes the assets and liabilities of SVB U.K.’s parent company.
Revenue increased by 50% year-on-year to $36.9 billion in the first half, which HSBC said was driven by higher net interest income across all its global businesses due to interest rate rises.

My job is to diversify the revenue. And I believe we’re starting to show evidence of that and we will continue to invest for diversification of revenue.

Noel Quinn
CEO of HSBC Holdings

Net interest income for the first half stood at $18.3 billion, 36% higher year-on-year, while net interest margin came in 46 basis points higher at 1.70%.
The strong performance was due to strong revenue growth across all business lines and all product areas, the CEO said. “Certainly, there’s an element of interest rates in there. But there’s also good growth in our fee income and trading income.”

Solid second quarter

For the second quarter alone, HSBC beat analysts’ expectations to report an 89% jump in pre-tax profit in the second quarter.
Pre-tax profit for the quarter ended in June was $8.77 billion, beating expectations of $7.96 billion.
Net profit was $6.64 billion, beating the $6.35 billion expected in analysts’ estimates compiled by the bank, jumping 27% compared to the same period a year before.
Total revenue for the second quarter came in at $16.71 billion, 38% higher than the $12.1 billion seen in the same period a year ago.
HSBC’s Hong Kong-listed shares rose 1.23% after the announcement.

Stock chart icon

Here are other highlights of the bank’s financial report card:

Net interest income came in at $9.3 billion in the second quarter, compared to $6.9 billion in the same period a year ago.
Net interest margin, a measure of lending profitability, rose 43 basis points year on year to 1.72% in the second quarter of 2023.

Moving forward, HSBC has also raised a key performance target, forecasting a near term return on tangible equity of 12%, compared to its previous target of 9.9%.
In fact, Quinn said that in the next two years, HSBC is expecting a “mid-teens” return on tangible equity, adding that “this is a broad-based delivery of profit and return.”
He sees future growth for HSBC coming from corporate banking, as well as international wealth and international retail banking for the affluent.
“We’re investing in areas that will drive growth beyond the interest rate regime there exists today. My job is to diversify the revenue. And I believe we’re starting to show evidence of that and we will continue to invest for diversification of revenue.”
Correction: This story has been updated to reflect that net interest margin rose 43 basis points in the second quarter of 2023. An earlier version misstated the year. More

Pedestrians walk past Yum! Brands Shanghai, China
Bloomberg | Getty

Check out the companies making headlines in extended trading.
Yum China — The restaurant franchiser’s shares fell 3.4% following its mixed second-quarter results. The company announced 47 cents in adjusted earnings per share on $2.65 billion in revenue. Analysts polled by Refinitiv had expected 46 cents earnings per share on $2.68 billion in revenue. Management noted that same-store sales across its restaurants still remained below pre-pandemic levels. 

ZoomInfo Technologies – Shares shed 17% in extended trading after the company posted a weak outlook for third-quarter revenue. The data company anticipates $309 million to $312 million in revenue, while analysts called for $326 million, according to Refinitiv. ZoomInfo’s revenue in the latest quarter also missed expectations, coming in at $309 million, while analysts estimated $311 million.
Western Digital — The data storage company’s stock gained 2% after a better-than-expected fiscal fourth quarter earnings report. Western Digital posted a loss of $1.98 per share on $2.67 billion in revenue. Analysts had estimated a loss of $2.01 per share on $2.53 billion in revenue, according to Refinitiv. 
Arista Networks — Shares rose more than 11% after the company’s quarterly earnings topped analysts’ expectations. Arista reported adjusted earnings of $1.58 per share, versus consensus analyst estimates of $1.44 per share, according to Refinitiv. Revenue also came in higher than expected at $1.46 billion, compared to analyst expectations of $1.38 billion. 
Lattice Semiconductor — The stock declined 2.6% after management noted that the company “is not immune to macroeconomic challenges” impacting the chip sector. Lattice reported second-quarter earnings of 52 cents per share, adjusted, on revenue of $190.1 million, while analysts polled by FactSet called for 51 cents in earnings per share on revenue of $188.2 million.
Rambus — The stock tumbled more than 8% after the release of its second-quarter earnings. Rambus posted $120 million in revenue, versus analysts’ forecast for $133 million, according to Refinitiv. Licensing billings and product revenue also declined year over year. 

Monolithic Power Systems — Shares lost 3.8% Monday in extended trading. The lower end of the semiconductor company’s revenue guidance for the third quarter came in below analysts’ estimates. Monolithic forecasts revenue of $464 million to $484 million for the third quarter, while analysts called for $473.4 million, per FactSet.
SBA Communications — Shares of the real estate investment trust added more than 4%. The wireless infrastructure company reported second-quarter revenue of $678.5 million, while analysts called for $676.9 million. SBA also announced a newly signed master lease agreement with AT&T. More