Rising costs tarnish HSBC's Asia-driven profit growth

31 October, 2017, 00:47 | Author: Pamela Mathis
  • HSBC third-quarter profits up five times

For the three months to the end of September, HSBC reported quarterly profits of $4.6bn (£3.5bn), up 448 per cent from $843m at the same point past year.

Nevertheless, the comparable 2016 figure had been negatively affected by one-off factors such as huge writedowns and restructuring charges.

In the first half of this year , the bank beat estimates with a pre-tax profit of $10.24 billion and revenue of $26.1 billion - a performance that helped HSBC shares climb in all three listings. The massive jump came weeks after a new chief executive was unveiled as part of a management overhaul that has seen the banking behemoth deal with costly write-downs.

Analysts said the third-quarter numbers were better than expected.

"HSBC has had to spend a lot of money to hire more lawyers to help it fix legal problems and enhance its compliance department", said Kingston Securities Executive Director Dickie Wong, adding that it may still feel the effects of legal challenges and expenses.

Asia loans and advances grew 17% in the three months to September 30, compared with the third quarter of 2016.

Mr Flint joined the lender as an worldwide officer in 1989, having spent the first 14 years of his career in Asia, helping to establish and expand the bank's global markets business in the region before moving back to London in 2004.




"Our global network continued to deliver strong growth in the third quarter, and our pivot to Asia is driving higher returns and lending growth, particularly in Hong Kong", Gulliver said in a statement. In a statement to the Hong Kong stock exchange the bank said that its "pivot to Asia" had driven over 70 per cent of the group's adjusted profit in the first nine months of this year.

The bank's strategy of expanding operations in the Pearl River Delta, an area of southern China where major cities such as Hong Kong and Guangzhou are situated, "is starting to obviously bear fruit for our shareholders", the chief executive told a press conference in London.

Net adjusted profits at HSBC's retail banking and wealth management division were up 11 per cent in the third quarter from a year earlier.

"Regionally, it's Asia which is doing the heavy lifting for HSBC (.) its business primarily resides in the far east", said Laith Khalaf, analyst at stockbroker Hargreaves Lansdown.

Revenue for FICC, which makes up the largest portion of the bank's global markets business, fell 6% to US$1.35bn due to lower market volatility.

HSBC is able to move "up to 1,000" employees to France, he added, where it has been operating for nearly two decades.

The ratio is set to increase in the medium term, as the bank repatriates about $8 billion stuck at its U.S. subsidiary, following approval previous year from the U.S. Federal Reserve.

Recommended:



Popular

Azerbaijan, Georgia, Turkey launch new Asia-to-Europe rail link
The initial plan was to open the railway in 2010 but it was delayed several times, mainly for financial reasons. The new Baku-Tbilisi-Kars railway promises to provide an economic boost to the region.

GameStop 'PowerPass' program gives you unlimited access to used games
There's no limit to how many games you can effectively "rent" using PowerPass, but you can only take one one home at a time. You'll also need to pick your games from what's physically available in-store, no pulling from GameStop's online selection.

Kim Jong-un visits cosmetics factory with wife and sister
Knowledge of the Kim family has often been a mystery to the outside world, with very little information escaping the rogue state. She is considered one of the most influential woman in North Korea, only second to Ri, according to Bloomberg .

Sprint and T-Mobile Call Off Merger, Sending Stocks Tumbling
Sprint and T-Mobile may not end up together after all - at least not in the immediate future. T-Mobile has done well as an independent the past few years, and consumers have benefited.

Nationals to name Martinez manager
None of the coaches who served under Baker were retained by the team, and no new coaching hires have been announced yet. The Chicago Cubs have another vacancy to fill, as one of Joe Maddon's top lieutenants has accepted another job.

Iraqi Kurdish leader to devolve powers after thorny vote
Kurdish officials offered this week to "freeze" the results of the vote, but Mr al-Abadi rejected the offer on Thursday. His term of office was to expire in 2013 but was extended by parliament.

Delta addresses Thunder plane damage en route to Chicago
Carmelo Anthony , Josh Huestis , and Steven Adams all posted photos of the plane shortly after it landed around 12:45 a.m. Despite the scary incident, according to WISN12, no one was injured as a result of the damaged plane.

Are you ready for the new TSA rules?
Economy passengers on Lufthansa's Swiss airline have been asked to check in at least 90 minutes before departure. The new screening process is meant to help avoid bans on certain electronics, like laptops, in the cabin.

Modi seeks debate on intra-party democracy, targets Congress
They said, "Some of you say that Modi did not meet you, before we met you, knocked on the door and used to go in". This "ideological unanimity" he said, seems to have lost with the expansion of the party.

Dozens of Colorado agencies participating in National Drug Take Back Initiative Saturday
The president's national health emergency declaration opens certain federal funds to drug treatment groups, among other things. Too often, unused prescription drugs find their way into the wrong hands, which is risky and can lead to tragedy.