HSBC saw profits in the third quarter more than double to $7.7 billion thanks to higher interest rates, figures likely to lead to fresh calls for banks to boost savings rates.
The London-listen lender also said it would do another $3 billion of share buybacks, taking the total to $7 billion, which ought to begood news for investors, though the profits were shy of expectations.
Those shareholders include Ping An of China, which has been pushing for a break-up of the giant bank. Other investors and bank managementled by CEO Noel Quinn have pushed back against that idea.
Quinn said today: “We have had three consecutive quarters of strong financial performance and are on track to achieve our mid-teens return on tangible equity target for 2023. There was good broad-based growth across all businesses and geographies, supported by the interest rate environment.”
Unlike other London banks, HSBC makes most of its money in Asia. Profits at the UK bank rose more modestly from $1.6 billion to $1.78 billion.
HSBC took an impairment charge of $1.1 billion for bad debts, of which $500 million relates to Chinese commercial real estate.
HSBC shares were steady today at £600p which values the bank at £118 billion.
Matt Britzman, equity analyst at Hargreaves Lansdown said: “There wasn’t much in these results to upset the apple cart and the fresh buy-back is testament to a strong capital position. HSBC is the only major UK-listed bank to still be up year-to-date after Standard Chartered left the club last week. Yet the valuation still looksdownbeat, paving the way for some impressive investor returns.”
Costs are going to be a little higher than analysts were forecasting.
Shore Capital said: “We suspect the market will be disappointed by this slippage in guidance given management has previouslystated that cost control is a key area of focus.”
The Bank of England meets this week to make its latest call on interest rates.
It is widely expected to hold them at 5.25%. Lately, the boost to bank profits from higher rates has begun to tail off, as savers move to higher paying accounts.
