Finance

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.

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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

The Fed’s closely watched Senior Loan Officer Opinion Survey, released Monday, showed that while credit conditions got stricter, demand declined as well.
On the issue of consumer lending, banks “reported having tightened standards for credit card loans and other consumer loans,” the survey said.

The U.S. Federal Reserve Building in Washington, D.C.
Win Mcnamee | Reuters

Lending conditions at U.S. banks are tight and likely to get tighter, according to a Federal Reserve survey released Monday.
The Fed’s closely watched Senior Loan Officer Opinion Survey showed that while credit conditions got more strict, demand declined as well.

Those results are important as economists who expect a recession believe that the most likely source will be from the banking system, which has had to respond to a series of 11 interest rate hikes as well as a momentary crisis in March when three midsize institutions failed.
“Regarding banks’ outlook for the second half of 2023, banks reported expecting to further tighten standards on all loan categories,” the Fed said in a survey summary. “Banks most frequently cited a less favorable or more uncertain economic outlook and expected deterioration in collateral values and the credit quality of loans as reasons for expecting to tighten lending standards further over the remainder of 2023.”
On the issue of consumer lending, banks “reported having tightened standards for credit card loans and other consumer loans, while a moderate net share reported having done so for auto loans.”
Banks also said they are raising the minimum level for credit scores when giving personal loans and are lowering credit limits in the $1.9 trillion consumer-loan space.
In the critical $2.76 trillion commercial and industrial lending segment, the survey noted that a “major” share of banks said they have seen lower demand for loans amid tightening standards across all business sizes.

Commercial real estate also saw a large share of banks saying they have put more restrictions on standards along with weaker demand.
Fed officials say they are aware of conditions in the banking sector, though they continue to raise interest rates to try to bring down inflation.
At his-post meeting news conference last week, Fed Chair Jerome Powell said he expected the loan survey to be “consistent with what you would expect.”
“You’ve got lending conditions tight and getting a little tighter, you’ve got weak demand, and you know, it gives a picture of a pretty tight credit conditions in the economy,” Powell said.
The Fed hiked its key interest rate another quarter percentage point at the meeting, taking it to a target range of 5.25%-5.5%, the highest in more than 22 years. More

Pedestrians walk by the SoFi Technologies headquarters on February 22, 2022 in San Francisco, California.
Justin Sullivan | Getty Images

Check out the companies making headlines in midday trading.
SoFi Technologies – Shares of the fintech company popped 19.9% after it reported second-quarter results and lifted its full-year guidance. SoFi Technologies posted a narrower-than-expected loss of 6 cents a share on a GAAP basis. Analysts surveyed by FactSet had expected a 7-cent loss per share.

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ON Semiconductor — The chipmaker’s shares jumped 2.5% after it posted an earnings and revenue beat for the second quarter. The company reported $1.33 earnings per share, excluding items, on $2.09 billion in revenue. Analysts polled by FactSet had estimated $1.21 earnings per share and $2.02 billion in revenue.
Disney — Disney climbed 3.2% after the Financial Times reported that the entertainment giant brought back back former executives Kevin Mayer and Tom Staggs, both of whom were once considered potential successors to Bob Iger.
New Relic — Shares jumped 13.4% after a private equity consortium announced it would take the software company private. The all-cash deal values the company at nearly $6.5 billion and offers $87 per share.
Spero Therapeutics — Shares ascended 14.8% after the company announced it reached an agreement with the Food and Drug Administration to have a special protocol assessment in its phase 3 trial for a urinary tract infection drug.
Sweetgreen — The salad chain’s shares jumped 6.9% Monday after an upgrade from Piper Sandler. The firm raised its rating on the stock to overweight from neutral, saying that the tide may be turning for the company.

XPeng — The Chinese electric vehicle maker tumbled 10.6% following a downgrade from UBS to neutral from buy. UBS said the company’s near-term gains may now all be priced in after shares more than doubled in price this year.
Hasbro — The toymaker rose 4.1% on the heels of Bank of America’s upgrade to buy from neutral. Bank of America said Hasbro could beat earnings expectations when it reports on Thursday, due in part to the success of its cards set tied to “Lord of the Rings.”
GoodRx – The digital health-care platform’s shares surged about 36.9% after Cowen upgraded them to outperform, saying the company’s pharmacy benefit management partnerships – like Express Scripts and CVS Caremark – help generate a new revenue stream but also solidify the company’s position in the health-care ecosystem. Cowen raised its price target to reflect about 78% potential upside.
Adobe — The software stock jumped 3.3% after Morgan Stanley upgraded the shares to overweight from equal weight. The Wall Street firm said while Adobe may have been “late to the party,” the company still stands to gain from artificial intelligence integration across its line of products. Morgan Stanley’s $660 price target represents nearly 25% upside.
Chevron — The oil giant advanced 3% after Goldman Sachs upgraded the stock to buy from neutral. The firm said it sees a cash flow inflection for the company.
New York Community Bancorp — Shares of the regional bank traded 1.5% higher after Deutsche Bank upgraded the stock to buy from hold, citing good execution.
CSX — The railroad stock shed 1.4% after RBC downgraded shares to sector perform from outperform despite noting fluid operations and positive performance in recent quarters.
Wayfair — Shares popped 6.5% after Piper Sandler upgraded Wayfair to overweight from neutral and raised its price target. The Wall Street firm said Wayfair is improving sales and taking back market share as the home furnishings industry stabilizes.
Salesforce — The cloud company saw its shares dip 0.3% after Morgan Stanley downgraded the stock to equal weight from overweight. The Wall Street firm said Salesforce’s near-term catalysts, including margin expansion and price increases, are now in the “rear-view mirror.” The stock has gone up 68% this year.
— CNBC’s Hakyung Kim, Yun Li, Sarah Min, Tanaya Macheel and Samantha Subin contributed reporting More

A private equity consortium will take software provider New Relic private at $87 a share, the company announced Monday.
The all-cash deal values New Relic at $6.5 billion and will see the company return to private ownership nearly nine years after it first debuted on the New York Stock Exchange.

Lew Cirne, CEO, New Relic
Scott Mlyn | CNBC

A consortium led by Francisco Partners and private equity group TPG will take software provider New Relic private in an all-cash, $87-a-share offer that values the company at nearly $6.5 billion, New Relic announced Monday.
New Relic shares rose 13% in morning trading, to nearly $84. The offer represents a 26% premium to New Relic’s 30-day volume-weighted average closing price, the company said. New Relic builds software to help websites and applications track performance.

The deal is expected to close by early 2024, the company said. It will return New Relic to private ownership nearly nine years after it first debuted on the New York Stock Exchange in 2014.
“We are pleased to partner with Francisco Partners and TPG, who are committed to continuing to build upon New Relic’s strong foundation and achieve its full potential,” New Relic founder and Executive Chairman Lew Cirne said in a release.
Reuters reported in May that Francisco Partners and TPG had ended deal talks after failing to secure enough debt financing to meet New Relic’s desired valuation. The resurrected transaction was announced concurrently with New Relic’s earnings report.
Since that report, the private equity groups were able to obtain financing and meet New Relic’s valuation requirements. Major shareholders, including Cirne and activist hedge fund Jana Partners, have signed off on the deal.
Under the terms of the agreement, New Relic will have a 45-day “go-shop” period, during which it can entertain offers from other qualified bidders.

TPG is an alternative asset manager with investments around the world, including Airbnb, Box and Zscaler.
Francisco Partners is a technology-focused private equity firm with past investments in Barracuda Networks, On Semiconductor and K2. In recent years, the firm has taken other cloud and IT companies private, including in a $1.7 billion deal for Sumo Logic and a 2018 deal for payment technology company Verifone.
Correction: Sumo Logic was taken private in a $1.7 billion deal. A previous version misstated the valuation of the deal. More

Richard Schueler, also known as Richard Heart, defrauded investors out of millions through his Hex cryptoasset, the SEC alleged.
Schueler used proceeds from the $1 billion offer-and-sale to purchase high-end watches, real estate, and jewels, it said.
Schueler faces three civil charges in the Eastern District of New York.

SEC Chairman Gary Gensler participates in a meeting of the Financial Stability Oversight Council at the U.S. Treasury on July 28, 2023 in Washington, DC.
Kevin Dietsch | etty Images

The Securities and Exchange Commission on Monday filed charges against a U.S. citizen it alleged raised more than $1 billion through the unregistered offer and sale of crypto securities before pilfering millions to fuel a high-status lifestyle and the acquisition of luxury goods, including the largest black diamond in the world.
Richard Schueler, also known as Richard Heart, operated three crypto-asset offerings: Hex, PulseChain and PulseX. The SEC alleged he touted the investments as a “pathway to grandiose wealth.”

The offerings were made through Hex tokens, which were marketed as an ethereum-based “Certificate of Deposit.” But the SEC alleged that the 38% annual return that Schueler touted was nothing more than cover for an elaborate scheme.
Schueler faces three charges of securities fraud in civil court.
Schueler, who was born in the United States but resides in Finland, surreptitiously defrauded his investors, the SEC alleged, by generating hundreds of millions of dollars worth of wash trading activity on his platforms, “creating the false impression of significant trading volume and organic demand for Hex tokens.”
Schueler misappropriated at least $12 million of investor funds, the SEC alleged, to purchase a 555-carat black diamond, high-end vehicles, and luxury watches. A $550,000 Rolex Daytona, an $800,000 Rolex GMT Master II and another unspecified $1.38 million Rolex watch were among his watch purchases, the SEC said.
In March, Schueler began to pare back his social media presence, deactivating his Instagram profile to “show more humility and respectfulness.”
The charges against Schueler were filed in the Eastern District of New York. More

A Hasbro Monopoly board game arranged in Dobbs Ferry, New York, Feb. 6, 2022.
Tiffany Hagler-Geard | Bloomberg | Getty Images

Check out the companies making headlines before the bell:
Adobe — The stock gained 2.4% before the bell after Morgan Stanley upgraded shares to overweight from equal weight and boosted its price target, citing artificial intelligence tailwinds.

Chevron — Shares rose 1.6% after Goldman Sachs upgraded Chevron to buy from neutral and hiked its price target. Analysts said the oil giant is due for a breakout.
Ford Motor — Shares declined 1.1% after Jefferies downgraded the stock to hold, citing weakness in Model E guidance.
Walt Disney — The stock rose 0.7% after Disney reportedly brought back two former executives who were previously considered potential successors to Bob Iger, according to a Financial Times report citing people familiar. The two are Kevin Mayer and Tom Staggs.
XPeng — The U.S.-listed shares of Chinese electric vehicle maker XPeng fell 2% in premarket trading. UBS on Monday downgraded the company to neutral from buy after the stock’s extraordinary run-up, saying it expects near-term upside has been priced in. The stock is up 135% this year.
Hasbro — The toymaker added 2.9efore the bell after Bank of America upgraded the stock to buy from neutral. Bank of America said the company should beat expectations for earnings when it reports on Thursday given the strong demand for the Lord of the Rings Magic set.

United Parcel Service — Shares fell 1% after Credit Suisse downgraded UPS to neutral from outperform, citing labor concerns.
GoodRX — The digital healthcare platform saw shares rise more than 8% premarket after Cowen upgraded the stock to outperform, saying its pharmacy benefit management partnerships – like Express Scripts and CVS’ Caremark – help not just generate a new revenue stream but also solidify the company’s position in the healthcare ecosystem. Cowen also raised its price target to reflect about 78% potential upside.
SBA Communications — Shares fell 1.6% in premarket trading. The real estate investment trust involved in wireless communications infrastructure is set to report its second-quarter results after the close Monday.
ON Semiconductor — The chipmaker’s shares gained 1.9% ahead of second-quarter earnings. ON Semiconductor is projected to report earnings of $1.21 per share on revenue of $2.02 billion, according to analysts polled by FactSet. It’s set to report results Monday morning.
— CNBC’s Alex Harring, Hakyung Kim, Tanaya Macheel and Samantha Subin contributed reporting More

EToro offered early employees and angel investors a chance to sell their shares to some of its institutional investors, according to a memo to employees obtained by CNBC.
The share sale totaled $120 million and gave the company a slightly lower valuation than the $3.5 billion it earned in a primary funding round earlier this year, according to CNBC sources familiar with the matter.
It comes after eToro last year scrapped its plans to go public in a merger with a blank-check company, Fintech V.

The eToro logo is seen during the 2021 Web Summit in Lisbon, Portugal.
Pedro Fiúza | Nurphoto | Getty Images

Stock trading platform eToro agreed to a $120 million secondary share sale, giving the company a slightly lower valuation than the $3.5 billion it was valued at in a primary funding round earlier this year.
The Israeli digital brokerage, which offers users trading in stocks, crypto, and contracts for difference, gave early employees and angel investors a chance to sell shares to some of eToro’s existing investors, according to a memo to employees obtained by CNBC.

The round is a secondary share sale, meaning the company hasn’t issued any new shares and won’t net any income from the transaction. However, it’s an indicator of the price investors are currently willing to pay to own shares of the firm.
It comes after eToro last year scrapped its plans to go public in a merger with a blank-check company, Fintech V.
The deal would have valued the company at $10 billion, but a downturn in equity and crypto prices threw a spanner in the works, as investors reassessed their exposure to tech and retail brokerages suffered a slump in trading activity.

“As a business which continues to demonstrate sustainable, profitable growth we are considered an attractive investment opportunity by many investors,” Yoni Assia, eToro’s CEO and co-founder, said in the Monday memo to employees. 
“This secondary transaction will give existing shareholders in eToro and veteran employees who have vested options the opportunity to sell a proportion of their shares to these purchasers.”

“This is not a primary i.e. eToro is not raising money — rather it is a moment for some long standing shareholders and employees to take some liquidity. As always, please maintain confidentiality and do not share any details of this potential transaction with anyone. Employees with eligible options will receive an email with further details.”
EToro most recently raised $250 million from investors at a $3.5 billion valuation, far lower than the $10 billion it was seeking in its bid to float via SPAC.
Investors in that round included SoftBank Vision Fund 2, ION Investment Group and Velvet Sea Ventures. The investment came in the form of an advance investment agreement, which is where investors pay in advance for shares that will be allocated at a later date, sometimes at a discount.
EToro agreed it would convert the investment to equity on the condition that the SPAC deal doesn’t go ahead — which it didn’t. 
Earlier this year, eToro signed a partnership with Twitter, now known as X, allowing users of the social media platform to access stock and crypto trading by searching for so-called “cashtags,” which are searchable by adding a dollar sign before the ticker symbol of a stock or other asset.

EToro said it is looking to expand its partnership with Twitter, or X, in a number of ways. The company’s CEO recently met with X CEO Linda Yaccarino in New York to discuss working on expanding their partnership.
EToro, like many online wealth management platforms, benefited from the surge of demand during the Covid-19 pandemic when people were stuck indoors and had more time — and in some cases money — to splash a bit of their excess cash on stocks and other assets.
GameStop, and several other so-called “meme” stocks, skyrocketed in response to heightened retail investor demand which put pressure on short-selling funds.
More recently, online brokerage platforms have had a tougher time. The rising cost of living has made it tougher for consumers to part with the cash they were flush with during the days of Covid. Freetrade, the U.K. brokerage startup, slashed its valuation by a whopping 65% in a crowdfunding round, citing a “different market environment.”
Read the full memo eToro CEO Yoni Assia sent out to staff below:

Dear eTorians,
As August approaches I wanted to take a moment to acknowledge the many achievements of H1 and share an outlook for H2.
As outlined in July’s AHM, we had strong business performance in the first half of the year resulting in EBITDA (profits) of over $50 million. Funded accounts now stand at almost 3 million and our assets under administration (AuA) are $7.8 billion. This positive start to the year was driven by the rally in equity markets  (in June we saw the highest volume of equities trading since 2021) plus a recovery in crypto markets. We have also maintained our focus on costs to ensure sustainable, profitable growth. 
2023 to date has been very busy in terms of product development, launches and partnerships with highlights including: the significant upgrade to our charts via a partnership with TradingView (more coming soon), an ISA with MoneyFarm, major milestones in terms of UX optimization including the new AI assistant, the launch of the amazing new eToro Academy, the launch of extended hours trading, expanding our football sponsorships to include women, adding more assets and so much more. 
I also want to update that we were recently approached by several existing investors who have shown an interest in buying more shares in eToro.  As a business which continues to demonstrate sustainable, profitable growth we are considered an attractive investment opportunity by many investors. [Please note this is not financial advice!]  This secondary transaction will give existing shareholders in eToro and veteran employees who have vested options the opportunity to sell a proportion of their shares to these purchasers. This is not a primary i.e. eToro is not raising money –  rather it is a moment for some long standing shareholders and employees to take some liquidity. As always, please maintain confidentiality and do not share any details of this potential transaction with anyone. Employees with eligible options will receive an email with further details.
For those of you taking a well-earned break in August, enjoy your vacation and I hope you come back refreshed and energized for an exciting second half of the year.
Best,
Yoni More