HSBC third-quarter profits up five times

HSBC spurred to huge profits from insurance arm
HSBC third-quarter profits up five times

31 October, 2017

"Our worldwide network continued to deliver strong growth. and our pivot to Asia is driving higher returns and lending growth, particularly in Hong Kong", HSBC Group Chief Executive Stuart Gulliver said in the statement. Profit attributable to ordinary shareholders of the parent company was $2.96 billion or $0.15 per share, compared to loss of $617 million or $0.03 per share a year ago.

That was largely the result of a weak third quarter past year, most notably due to a US$1.7bn loss booked following the sale of its Brazil operations.

Analysts were expecting the bank, which is listed in London, New York and Hong Kong, to post an increase in its profit as well as revenue before taxes for the third quarter, helped by continuous efforts in cost cutting and a low base to be compared to from the same quarter one year ago.

Its customer base for retail banking and wealth management in mainland China had expanded by more than 70 percent so far this year, it said. The area represented 87% or close to 4$ billion of the profit before taxes of the bank for the third quarter, and is what makes the bank different from its peers across Europe, said an industry analyst.

Adjusted for these, pre-tax profit fell by one per cent year-on-year in the July-September period, HSBC said.

HSBC's gradual shift towards Asia showed signs of paying off on Monday, as the global bank posted an nearly five-fold increase in profits for the most recent quarter, broadly meeting analyst expectations.

Shares of HSBC were down 0.3 percent to close at 76.85 HK dollars on Monday.

HSBC's latest financial statement showed once again the company's ability to pick itself up after the global financial crisis.

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In global banking - which includes securities services, global liquidity and cash management, global trade and receivables finance and investment banking - revenues of $943m were down 5% year-on-year.

Investors and analysts interpreted the results as another sign the bank's turnaround, which CEO Stuart Gulliver started in 2011 and accelerated in 2015, is gaining traction.

But while HSBC did well in retail and commercial banking, the group's performance in global banking and markets was down slightly in the third quarter.

The bank's switch to focus on Asia appears to be paying off too as the region's adjusted profit for Q3 rose 6% to US$4bn, accounting for three-quarters of group profit.

HSBC is in the midst of carrying out a restructuring with the goal of increasing profitability.

HSBC earlier this month chose veteran John Flint as its next chief executive, with its newly arrived chairman promoting an insider to drive revenue growth.

The bank has made expanding in China's fast-growing Pearl River Delta region a key strategy.

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