The Abu Dhabi Stock Exchange and HSBC are jointly developing blockchain-backed digital assets

Abu Dhabi Stock Exchange (ADX) has partnered with British banking giant HSBC Holdings Plc to jointly develop blockchain-backed digital fixed income securities to be listed on ADX, zawya.com has announced.

The two parties will explore a framework that allows digital assets to be available on the bank's platform, HSBC Orion, and listed on the stock exchange. Digital assets include financial instruments such as digital bonds, which are created and managed using blockchain and smart contract technology.

The partnership between ADX and HSBC is the first regional collaboration of its kind and will pave the way for the introduction of a wider range of products for the capital market in the region.

"HSBC is digitizing on a large scale by adopting new technologies such as blockchain to enable the issuance of digital assets," said Mohamed Al Marzouqi, CEO of HSBC United Arab Emirates.

For his part, Abdulla Salem Alnuaimi, CEO of ADX, said: "We believe that digital assets will grow in importance in the future, and ADX intends to be at the forefront of this innovation. Our project reaffirms our commitment to ADX's digital transformation journey and complements our efforts to continue to deliver innovative products to our expanding investor base."

With blockchain technology, assets such as stocks, fixed income, real estate and private equity can be tokenized, making securities more accessible to a wider base of investors, according to ADX and HSBC.

The Arab Monetary Fund claims that the financial markets of the United Arab Emirates (UAE) and Saudi Arabia occupied the first place among the Arab stock exchanges, in the third quarter of the current year, after obtaining profits of almost 167 billion dollars. According to the cited source, the markets in the United Arab Emirates made gains of approximately $32.5 billion in the third quarter, of which $20.7 billion went to the Abu Dhabi Securities Exchange (ADX) and $11.8 billion to Dubai Financial Market (DFM). In the case of ADX, the market capitalization increased from $755.9 billion at the end of the second quarter of the current year to $776.7 billion at the end of the third quarter, while the market capitalization of DFM rose from $177.8 billion to $189.7 billion. The Saudi financial market gained about $134.1 billion, with market capitalization rising from $2.908 trillion to $3.04 trillion, while the Qatar Stock Exchange's market capitalization rose from $162.6 billion to $165.8 billion, earning over $3.2 billion.

• HSBC's after-tax profit up more than 135%

HSBC's after-tax profit was $6.26 billion in the quarter ended September 2023, up 135 percent from $2.66 billion in the same period last year, CNBC reports.

Europe's biggest bank by assets also saw pre-tax profit rise by $4.5 billion to $7.7 billion, mainly due to higher interest.

However, the figures reported last week by HSBC were below the expectations of economists, who had forecast an after-tax profit of $6.42 billion in the third quarter of 2023 and a pre-tax profit of $8.1 billion.

HSBC said the increase in its results was partly due to a $2.3 billion impairment charge in the third quarter of 2022 related to the planned sale of its French retail banking operations. Of this amount, $2.1 billion was reversed in the first quarter of 2023 as it became less certain that the transaction would be completed.

The bank's revenue rose to $7.71 billion in the third quarter of 2023, from $3.23 billion a year ago. HSBC also attributed this to the higher interest rate environment.

Net interest margin - a measure of lending profitability - was 1.7%, up 19 basis points from a year earlier and beating estimates of 1.68%.

For the nine months ended September, HSBC's profit after tax was $24.33 billion, compared with $11.59 billion in the first nine months of 2022.

The bank approved a third interim dividend of 10 cents per share.

HSBC also announced that it will launch a new share buyback of up to $3 billion, which is expected to "commence shortly" and be completed by the time full-year results are announced on February 21, 2024.