Published: Tue, October 31, 2017
Culture&Arts | By Darrell Mcdonald

HSBC share price subdued even as group posts surge in profits

HSBC shares listed in Hong Kong rose by 0.9 per cent in morning trading on Monday before the results were announced.

The latest results reflected favourable movements in significant items, partly reflecting the non-recurrence of a $1.7 billion loss recognised in a year ago on the bank's sale of operations in Brazil to Banco Bradesco S.A., which was completed on July 1, 2016.

For the first three quarters of the year, income for global banking increased 4% to US$2.89bn after a good first half for debt capital markets.

Pretax profit was $4.6 billion in the September quarter, up from $843 million in the same period a year ago, HSBC said in a stock exchange filing.

In global banking - which includes securities services, global liquidity and cash management, global trade and receivables finance and investment banking - revenues of $943m were down 5% year-on-year.

"I think on a year-on-year basis there will be multiple jumps on profit because of the low base last year, which was, in turn, caused by a one-off expense last year".

"We maintained good momentum in the third quarter", Stuart Gulliver, HSBC's group chief executive, said in a statement.

Analysts had expected the bank, which is listed in Hong Kong , London and NY , to report an increase in third-quarter pre-tax profit and revenue, helped by the continuous cost-cutting effort and a low base from a year ago.

More news: Jim McElwain, Florida mutually agree to part ways

Investors and analysts interpreted the results as another sign the bank's turnaround, which CEO Stuart Gulliver started in 2011 and accelerated in 2015, is gaining traction.

Mr. Gulliver heralded a "pivot to Asia" in June 2015 as one of the finishing touches to the bank's overhaul after the financial crisis.

The company also reported that in the nine months to the end of September it had spent £12m on costs associated with the UK's exit from the European Union.

"Management has made a big point about its ambition to deliver positive jaws for the full year, but the weak performance in Q3 makes this now look a much more challenging objective", said analyst Gary Greenwood at Shore Capital.

A focus on its Asian businesses has helped FTSE 100 bank HSBC to more than quadruple profits in the three months to 30 September. The bank's pivot to the region is centered around China's Pearl River Delta, where it has committed billions in investments.

HSBC is also expected to repatriate up to US$10bn of capital stuck at its US subsidiary after the US Federal Reserve previous year gave approval for its US arm to pay a dividend to the group, which has helped its plan to buy back shares.

The announcement came just days after former AIA chief executive Mark Tucker took over the role of HSBC's chairman, replacing Douglas Flint.

Like this: