HSBC Profit Beats Estimates as Costs Fall Faster Than Revenue
HSBC put this down to “a net favourable movement in significant items”, which means they cut costs, including selling off parts of the business in Brazil and Turkey, to boost profits in the quarter.
Recent quarterly earnings reports for the bank have been marred by provisions for regulatory investigations, including allegations that HSBC and other banks rigged foreign exchange markets worldwide and that HSBC helped Swiss clients evade taxes.
The bank, Europe’s largest by market value, on Monday posted $6.1 billion in profit for the July-September period, up 32 percent from a year earlier. That was more than the $5.2 billion average estimate of 14 analysts compiled by the bank. “In particular, the stock market correction in Asia affected Principal Retail Banking & Wealth Management, and revenue was also lower in Global Banking & Markets”, Gulliver said in a statement.
Yet the London-based lender continues to grapple with declining revenue and also reported that it spent $2.2 billion on regulation and compliance in the first nine months of the year, up 33 percent year on year, even as the British government looks to take a more accommodative stance towards the industry.
HSBC shares fell 0.6 percent to 504.60 pence at 8:16 a.m.in London.
HSBC has only just started shedding assets.
Perhaps the most-watched of the ten goals by investors is the bank’s strategic review into whether it should move its headquarters out of Britain, with Hong Kong viewed as the most likely destination. We remain focused on reducing our risk-weighted assets quickly and efficiently.
HSBC says the increase reflects lower fines, settlements and United Kingdom customer redress.
According to HSBC, despite slowing growth in the mainland Chinese economy and market volatility in Asia, the quarter saw no visible impact on its Asian credit quality.
“Our cost-reduction measures are beginning to have an impact”, Gulliver said. A $300 million decline in revenue reflected lower wealth-management income in Hong Kong, the bank said.