HSBC Q3 profit misses expectations; $3bn share buyback announced

HSBC posted a smaller-than-expected jump in third-quarter profits on Monday, as it announced a $3bn share buyback.

In the three months to the end of September, pre-tax profit rose to $7.7bn from $3.2bn in the same period a year earlier, falling short of consensus expectations of $8.1bn.

HSBC said expected credit losses and other credit impairment charges of $1.1bn were broadly in line with the same period a year earlier. They included $500m relating to the commercial real estate sector in mainland China.

"We continue to monitor risks related to our exposures in mainland China's commercial real estate sector closely, and there remains a degree of uncertainty in the forward economic outlook, particularly in the UK," the bank said.

Revenue increased by 40% to $16.2bn, mainly due to higher net interest income and the non-recurrence of the impairment relating to the planned sale of its retail banking operations in France in Q3 2022.

The net interest margin declined two basis points on the same period a year earlier to 1.70%. The bank said this reflected an increase in customers migrating their deposits to term products, particularly in Asia. NIM is the amount of money a bank is earning in interest on loans versus the amount it is paying in interest on deposits.

Chief executive Noel Quinn said: "We have had three consecutive quarters of strong financial performance and are on track to achieve our mid-teens return on tangible equity target for 2023.

"There was good broad-based growth across all businesses and geographies, supported by the interest rate environment. Our wealth business also gained further traction, attracting $34bn of net new invested assets in the quarter and growing wealth balances by 12% compared with last year."

Matt Britzman, equity analyst at Hargreaves Lansdown, said: "There wasn’t much in these results to upset the apple cart and the fresh buyback is testament to a strong capital position.

"HSBC is the only major UK-listed bank to still be up year-to-date after Standard Chartered left the club last week. Yet the valuation still looks downbeat, paving the way for some impressive investor returns."