The HSBC Holdings Plc building in Canada Square in the Canary Wharf financial district on August 15, 2023 in London, United Kingdom.
Mike Kemp | In pictures | Getty Images
The largest lender in Europe HSBC It announced on Tuesday that it would buy back up to $3 billion in shares, as it released a third-quarter earnings report that beat analysts' estimates, helped by strong revenue growth as well as its wealth and personal banking divisions.
Here are HSBC's results compared with LSEG SmartEstimate, which are weighted towards the consistently more accurate analyst forecasts:
Earnings before tax: $8.5 billion vs. $8 billion Revenue: $17 billion vs. $16.2 billion
HSBC's pre-tax profit represents a 10% increase on the $7.71 billion generated a year ago. Profit after tax was $6.7 billion, an increase of $500 million from the third quarter of 2023.
Quarterly revenue grew 5% to $17 billion, compared to $16.2 billion reported a year ago.
The bank's new $3 million stock buyback brings the total announced this year to $9 billion — $3 billion announced in the first quarter and another $3 billion in the second quarter. The company added that its board of directors also approved the distribution of a third interim dividend of $0.1 per share.
Net interest margin, a measure of lending profitability, fell to 1.5% from 1.7% a year ago. While basic earnings per share for the quarter were 34 cents, higher than 29 cents in the same period last year.
HSBC shares rose 3.5% in afternoon trading in Hong Kong after the report was released.
HSBC has benefited from rising interest rates in recent years. But as that era ended, there was a fear that banks would face lower profitability as interest rates fell.
Third-quarter earnings were “strong, without any major surprises,” Michael Mokdad, chief equity analyst at Morningstar, told CNBC. “Bank net interest income was stable even as net interest margins narrowed as the rates cycle began to decline.”
HSBC Bank announced a 2% rise in operating expenses for the third quarter, compared to the same period last year, due to higher spending and investment in technology.
Earlier this month, the Financial Times reported that HSBC Chairman George Al Hudayri may appoint the bank's senior management as part of cost-cutting plans that could save up to $300 million.
Al-Hudayri, a former CFO, was appointed to lead the company in July, when the bank announced the retirement of former CEO Noel Quinn, who had been at the helm of the company for nearly five years.
The earnings announcement comes a week after the bank revealed plans to restructure into four business units, dividing its operations into the “Eastern Markets” branch and the “Western Markets” division, amid a comprehensive reform process that witnessed the appointment of the bank’s first female chief financial officer. .
HSBC has also pledged to streamline its business to “reduce duplication of processes and decision-making”. Al-Haidari said that the new structure will take effect in January, “and will lead to a simpler, more dynamic and flexible organization.”
