Summary
Europe's largest bank HSBC on Tuesday announced a share buyback of up to $1 billion and reported third-quarter pretax profit that largely met analysts…
Revenue at HSBC rose to $18.6 billion from $17.8 billion in the same period last year, while banking net interest income rose 6%, alongside the bank clocking higher fee income form its corporate and institutional banking and wealth business.
HSBC's London-listed shares dropped 6.5% in early European deals Monday, putting them on course for the worst session since Apr. 3 2025. Earlier, shares in Hong Kong dropped 2.95% following the earnings release, which saw the bank approve a third interim dividend of 10 cents per share.
Citi analysts cited a "mixed set of results," noting a 2% miss on revenue expectations but an 18.8% return on tangible equity in the year to date — significantly ahead of its medium-term guidance of around 17%.
Here are HSBC's third-quarter results compared with the consensus estimates compiled by the bank.
The bank's third-quarter profit before tax increased 32% from a year earlier to $9.6 billion, also reflecting the absence of $1.4 billion in legal provisions recorded in the same period last year. Higher revenue and lower credit losses also supported earnings.
The bank's net interest income rose to $9.3 billion in the third quarter, supported by deposit growth and reinvestment of its "structural hedge at higher yields."
Meanwhile, operating expenses decreased 12% year on year to $8.8 billion, largely due to non-recurrence of legal provisions recorded a year earlier. Excluding notable items, expenses rose amid inflation and higher spending on technology.
Looking ahead, HSBC maintained its forecast for banking net interest income of at least $46 billion in 2026, while reiterating its target for return on average tangible equity — a metric for assessing profitability — of 17% or higher for 2026 through 2028, excluding notable items.
The bank also expects revenue to grow annually through 2028, targeting 5% growth that year compared with 2027, excluding notable items and on a constant currency basis.
HSBC said it remains on track to deliver operating expense growth of approximately 1% in 2026 on a target basis, although strong business performance could lead to additional performance-related pay and modestly higher cost growth.
The bank said it had bought back $1 billion in shares announced at its interim results, and expects to complete another $1 billion in buybacks before its full-year 2026 results.
HSBC is reportedly considering significant job cuts in its U.K. wealth management business, as part of a broader push to adopt artificial intelligence.
Source: CNBC
