HSBC Q3 profit misses estimates, to buy back US$3 billion of shares
HSBC Holdings reported on Monday (Oct 30) a 240 per cent increase in third-quarter pre-tax profit, as higher interest rates boosted the bank’s profitability and helped it fund a fresh US$3 billion share buyback.
The results from Europe’s biggest bank showed the pressure it is under to deliver to long-suffering investors now that interest rates worldwide are rising, as its profit more than doubling in Q3 nonetheless missed analysts’ expectations because of higher costs.
HSBC also indicated costs are likely to increase by 4 per cent this year, more than its previous goal of a 3 per cent rise, as technology and operating spending grows and it considers a boost to staff bonuses in Q4.
The bank posted a pre-tax profit of US$7.7 billion for the July to September quarter, versus US$3.2 billion a year earlier, but the result trailed the US$8.1 billion mean average estimate of brokers compiled by HSBC.
The London-headquartered bank with a market value of US$118.6 billion said it aimed to complete the share buyback by next February, lifting the total buybacks announced this year to US$7 billion.
It also dished out the third interim dividend payout this year of 10 US cents per share, bringing the total payout to 30 cents per share.
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HSBC‘s Q3 net interest margin of 1.7 per cent was squeezed by 2 basis points compared with the prior quarter, reflecting an increase in customers migrating their deposits to term products, particularly in Asia.
In the Q3 results, the lender booked a US$500 million impairment related to the commercial real estate sector in mainland China.
“We continue to monitor risks related to our exposures in mainland China’s commercial real estate sector closely, and there remains a degree of uncertainty in the forward economic outlook, particularly in the UK,” the company said in the results statement.
HSBC‘s Asia-focused competitor Standard Chartered reported last week an unexpected one-third plunge in Q3 profit, due to a nearly US$1 billion combined hit from its exposure to China’s real estate and banking sectors. REUTERS
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