HSBC profit up 28 per cent in Q3

The Gulf Today - Business - - INTERNATIONAL -

HONG KONG: HSBC Hold­ings posted a higher-than-ex­pected 28 per cent rise in third-quar­ter profit as a re­newed push to rein in costs and mar­ket share gains in its main­stay Asian re­gion paid off, send­ing its Hong Kong shares sharply higher on Mon­day.

Europe’s big­gest bank by as­sets has in re­cent years reaped the ben­e­fits of a wider re­struc­tur­ing af­ter the global fi­nan­cial cri­sis, but ris­ing costs have been a con­cern as CEO John Flint, who started in the job in Fe­bru­ary, steps up in­vest­ments.

Stub­bornly high costs had in pre­vi­ous quar­ters weighed on HSBC’S prof­its, with an­a­lysts say­ing its share price growth will be capped un­til it can show rev­enues ris­ing above costs, in a trend known as ‘pos­i­tive jaws’ in city par­lance.

“We’re ab­so­lutely in line with our plans, so we still ex­pect to get pos­i­tive jaws for the full year,” Flint told Reuters in a phone in­ter­view. “The real driver is that we have got con­trol over cost base and we got some rev­enue mo­men­tum.”

In the Septem­ber quar­ter, the bank’s re­ported pre­tax profit was $5.9 bil­lion, up from $4.6 bil­lion in the same pe­riod a year ear­lier. The profit was higher than the $5.6 bil­lion av­er­age of an­a­lysts’ es­ti­mates compiled by the bank and the per­cent­age growth was its strong­est in four quar­ters.

HSBC said its ex­penses in the third quar­ter fell 2.4 per cent from the pre­ced­ing three months, re­vers­ing the trend of the last cou­ple of quar­ters. Quar­terly re­ported rev­enue grew 6.3 per cent from the year-ago pe­riod to $13.8 bil­lion.

Flint has out­lined plans to spend as much as $17 bil­lion in three years on tech­nol­ogy and in China.

HSBC is also hir­ing more peo­ple to boost growth in some of its busi­ness units in­clud­ing in­vest­ment bank­ing and pri­vate bank­ing - the ar­eas where it has lagged its Amer­i­can and some of its Euro­pean ri­vals.

This month it hired for­mer Jpmor­gan banker Greg Guyett as co-head of global bank­ing, which in­cludes in­vest­ment bank­ing, to fill a gap left by the depar­ture of for­mer Gold­man Sachs banker Matthew Wester­man last year.

It also poached Gold­man Sachs vet­eran banker Peter Enns as its global head of fi­nan­cial in­sti­tu­tions group in its in­vest­ment bank, af­ter los­ing a num­ber of high-pro­file deal­mak­ers this year.

The bank’s num­ber of full-time em­ploy­ees at end-septem­ber saw an in­crease of 5,044 from De­cem­ber to 233,731, it said.

Reuters

A logo is pic­tured on an HSBC bank in Geneva, Switzer­land.

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