Results round-up

HSBC reported that profits in the third quarter fell 86% compared to last year due to the disposal of its Brazilian bank, but underlying profits were higher in all four of its business functions and better than the market expected.

The FTSE 100 bank lifted revenues and continued to cut costs in the three months to 30 September, saying the Brazil sale had allowed it complete almost two thirds of a $2.5bn share buyback as well as maintain its ongoing dividend.

On a reported basis, revenue fell 37% to $9.5bn in the third quarter, with reported profit before tax shrinking 86% to $0.84bn.

However, reported profits were hit by several exceptional items, including a $1.7bn loss from the Brazil disposal, $1.0bn of restructuring costs, $1.4bn of negative movements in its own debt as credit spreads tightened and $0.5bn of UK customer redress charges, together with a $658m drag from the strengthening US dollar.

Stripping this out, adjusted revenues were up 2% to $12.79bn and PBT climbed 7% to $5.6bn, with profit growth in four out of five regions and a better-than-expected 4% reduction in costs helping profits beat the consensus analyst forecast of $5.1bn.

Chief executive Stuart Gulliver said the benefits of the Brazil sale were apparent, despite the lost profits.

"This is another action forming part of our ongoing capital management of the Group that reinforces our ability to support the dividend, to invest in the business and, over the medium term, to contemplate share buy-backs, as appropriate. It also provides us with a significant capacity to manage the continuing uncertain regulatory environment."

HSBC expects to finish the buyback programme by the end of 2016 or early in the first quarter of 2017, depending on market trading volumes in the fourth quarter, while it has made $2.8bn of annualised cost savings and is on track to achieve our 2017 cost-saving target as well.

The bank's balance sheet was also in better shape, thanks to a change in capital requirements for Chinese bank BoCom, allowing the common equity tier-1 capital ratio to increase to 13.9%.

Ryanair reported a rise in first-half profit as revenue and customer numbers grew despite difficult market conditions, and the budget airline upped its long-term traffic forecast.

First-half profit after tax rose 7% from the same period a year ago to €1.17bn on revenue of €4.13bn, up 2%. The company said customer numbers grew 12% to 64.8m, while average fares fell 10% to €50.

Chief executive officer Michael O’Leary said: "We are pleased to report this 7% increase in H1 profits, which was a creditable performance in difficult market conditions due to repeated ATC strikes, terror events, and the adverse economic impact of the Brexit vote in June which saw sterling weaken materially over the peak summer period.

“We responded by accelerating our Always Getting Better ("AGB") customer experience programme, and using our lower costs base to stimulate stronger forward bookings with lower fares.”

Looking forward, the group said it remains cautious on the outlook for full-year 2017, as it expects weaker air fares and Brexit uncertainty to be dominant features of the second half.

Still, having hedged both its fuel and sterling exposures, it remains comfortable with its revised full-year guidance of €1.30bn to €1.35bn of net profit, although it added that this is heavily dependent on there being no unexpected adverse declines in fourth-quarter airfares.

Ryanair lifted its long-term traffic forecast by over 10% to more than 200m customers per annum by March 2024.