Hong Kong

THE global bank's third-quarter earnings were free of the big fines and compensation claims that have been a recurring feature in recent years. That suggests hefty investment in compliance may be generating returns. HSBC forked out just US$200 million in the latest three-month period to atone for bad behaviour, compared with US$1.6 billion a year earlier. Other expenses are falling as executives take a newly sharpened axe to the bank's cost base. Asian bad debt provisions were down 30 per cent despite worries over an economic slowdown in the region.

The problem now is growth. The turbulent summer in emerging markets hurt HSBC in two ways. Falling stock markets in Hong Kong dragged down a popular investment product whereby the bank shares a proportion of customers' gains - or, in this case, losses. The bank's measure of adjusted pretax profit in the former British colony was down 16 per cent as a result. Meanwhile, volatile markets dented revenue in HSBC's investment banking business. Though one quarter doesn't make a trend, this is not what HSBC had in mind earlier this year when it promised to "capture growth opportunities in Asia".