HSBC posts 32% jump in Q3 profits but results fall slightly short

(Sharecast News) - HSBC posted a 32% jump in pre-tax profit on Tuesday but third-quarter results from the bank were a touch short of expectations. Pre-tax profit rose to $9.63bn, with revenue 5% higher at $18.62bn, mainly reflecting growth in banking net interest income. Both figures were just slightly below forecasts, however, as analysts were expecting pre-tax profit of $9.69bn and revenue of $18.93bn.

Net interest income - the difference between what banks charge for loans and what they pay out for savers' deposits - was up 6% on the same period a year earlier to $9.3bn.

Operating expenses were $8.8bn during the quarter, down 12% on the same period a year earlier.

The bank also announced plans to initiate a $1bn share buyback, to begin shortly after the release of the Q3 results and complete by the full-year results announcement.

Chief executive Georges Elhedery said: "Our performance shows that in a more complex world clients continue to turn to us to navigate uncertainty and seize new opportunities. It also reflects consistent execution of our strategic priorities with pace, precision and discipline.

"As we simplify HSBC, we are creating greater capacity to invest, grow and deliver strong returns for our shareholders."

Freetrade analyst Duncan Ferris said: "A considerable jump in earnings had been anticipated given legal costs the business faced in the comparable period last year.

"The tease of shareholder returns may act as a tonic to a potential wrinkle in the policy environment. Like other British banks, HSBC may be in store for an increased surcharge on profits in this week's Budget.

"If Chancellor John Healey does confirm the much-rumoured measure on Wednesday, the increased tax burden could increase the rarity of shareholder windfalls from the likes of HSBC. However, as the rumoured surcharge reportedly applies to UK profits, HSBC may be more insulated than most competitors given its extensive Asian business."

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