HSBC posts huge jump in profit as Asia busi­ness grows

The Malta Business Weekly - - FRONT PAGE -

Bank­ing gi­ant HSBC has re­ported pre-tax quar­terly prof­its of $4.6bn for the three months to the end of Septem­ber.

The re­sult marks a huge 448% in­crease from $843m posted in the same pe­riod a year ago.

At that time, earn­ings were hit by a one-off loss of $1.7bn from the sale of its Brazil­ian unit.

The lat­est re­sult met mar­ket ex­pec­ta­tions and was helped by cost-cut­ting and a fo­cus on Asia.

“Our pivot to Asia is driv­ing higher re­turns and lend­ing growth, par­tic­u­larly in Hong Kong and the Pearl River Delta,” HSBC’s chief ex­ec­u­tive, Stu­art Gul­liver, said in a state­ment.

The firm’s earn­ings were fur­ther boosted by higher pre­mi­ums from its in­sur­ance and as­set man­age­ment busi­nesses in Asia.

HSBC’s shares were down more than 1% in late morn­ing trad­ing in Lon­don fol­low­ing the earn­ings up­date. An­a­lysts at­trib­uted the down­ward move to profit-tak­ing by in­vestors.

Since the 2008 fi­nan­cial cri­sis, HSBC has been cut­ting jobs and sell­ing as­sets to make the group more prof­itable, while still mak­ing div­i­dend pay­ments to share­hold­ers.

De­spite its ori­gins in Asia and re­newed em­pha­sis on the re­gion, the bank has its head­quar­ters in the UK.

Like other ma­jor fi­nan­cial in­sti­tu­tions, it is hav­ing to make ad­just­ments to its op­er­a­tions ahead of Brexit.

It had sug­gested in the past it may move 1,000 jobs to Paris, although in a con­fer­ence call fol­low­ing its re­sults on Mon­day, fi­nance di­rec­tor Iain Mackay said it could be less than that.

Mr Mackay said th­ese quar­terly re­sults in­cluded $12m in costs in re­la­tion to Brexit, mostly on le­gal ad­vice to help with con­tin­gency plan­ning. He said HSBC ex­pects to spend $200m-$300m on Brexit re­lo­ca­tion costs.

The bank’s con­tin­ued bet on Asia, one of the world’s fastest-grow­ing eco­nomic re­gions, has been part of its strat­egy to ex­pand the busi­ness and make up for losses else­where.

Ear­lier this month, the bank’s new chair­man, Mark Tucker, said it would be work­ing “to de­velop and agree the key ac­tions re­quired to en­sure we build on and en­hance HSBC’s cur­rent mo­men­tum”.

Those ini­tia­tives will be led by HSBC’s newly ap­pointed group chief ex­ec­u­tive, John Flint, who for­mally takes over from Stu­art Gul­liver next Fe­bru­ary.

Mr Flint has said the bank had to “in­no­vate and ac­cel­er­ate the pace of change re­quired” to meet the ex­pec­ta­tions of share­hold­ers, cus­tomers and em­ploy­ees.

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