HSBC beats estimates, Q3 net rises 28% to $5.9 bn on Asia biz, lower costs

HSBC is 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

HSBC Holdings Plc reported on Monday a better-than-expected 28 per cent rise in quarterly profit before tax, bolstered mainly by the lender's Asia business and better control over costs.

The bank's reported pretax profit was $5.9 billion in the September quarter, up from $4.6 billion in the same period a year earlier, HSBC said. The profit was higher than the $5.6 billion average of analysts' estimates compiled by the bank.

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, makes more investments.

 

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 with Flint planning to spend as much as $17 billion in three years on technology and in China.



"We are doing what we said we would - delivering growth from areas of strength, and investing in the business while keeping a strong grip on costs," Flint said in the company earnings statement filed to the Hong Kong exchange.

Stubbornly high costs have in recent quarters crimped 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.

HSBC's quarterly reported revenue grew 6.3 per cent from the year-ago quarter to $13.8 billion.

The lender is 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.



HSBC this month 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.

HSBC's common equity tier 1 ratio - a measure of financial strength - was 14.3 per cent at end-September, meeting analyst expectations. It was lower than the 14.5 per cent at the end of 2018 but higher than the 14.2 per cent at end-June.