Profits at banking giant HSBC leapt fivefold in the third quarter of the year to US$4.6 billion as business booms in Asia and a huge restructuring drive bears fruit, the company said yesterday.
The massive jump in pre-tax profits came weeks after a new chief executive was unveiled as part of a management overhaul that has seen the London-based behemoth roar back from costly write downs.
Head of retail banking and wealth management John Flint is to take up the position in February when CEO Stuart Gulliver steps down and has said he wants to “accelerate the pace of change.”
The Asia-focused firm has been on a recovery drive to streamline its business and slash costs since 2015, including laying off tens of thousands of staff.
That came as part of wide-ranging restructuring programs during a troubled period for the bank and sector as a whole following the global financial crisis in 2008.
Reported pre-tax profit jumped to US$4.6 billion in the three months to the end of September, compared with US$843 million over the same period last year.
Shares were up 0.7 percent at HK$77.65 in early afternoon trading.
Gulliver said the bank had “maintained good momentum in the third quarter,” with higher revenue across its main global businesses.
“Our pivot to Asia is driving higher returns and lending growth, particularly in Hong Kong,” he added.
Net profit also rose from a loss of US$617 million in the third quarter of last year to US$2.96 billion.
Profits last year were hit by the loss on sale of the bank’s operations in Brazil, the bank said in its statement.
Analysts said the result was better than expected.
“I think HSBC is one of the best international banking stocks at this moment,” Kingston Securities (金利豐證券) executive director of research Dickie Wong (黃德几) told reporters. “It is the third consecutive quarter that earnings and revenue have increased.”
The bank said it was on track to achieve annual cost savings of US$6 billion by the end of the year.
After some strong profitable years under Gulliver, HSBC earnings plunged last year on huge write-downs and restructuring charges. Profits rebounded in the first half of this year.
The bank in 2015 set out a plan to axe 50,000 jobs and exit non-core markets as it also navigated a series of damaging probes into HSBC operations.
Wong said the bank could still feel the effects of legal challenges and expenses.
“HSBC has had to spend a lot of money to hire more lawyers to help them to fix their legal problems and to enhance their compliance department,” Wong said. “This is something that may pull them back.”
The bank was fined US$1.92 billion by US prosecutors in 2012 to settle allegations that it failed to enforce rules against money laundering, exposing it to exploitation by drug cartels and terrorist organizations.
In 2015, HSBC was forced to apologize for “unacceptable” failings at its Swiss division following allegations that the unit helped rich clients hide billions from the tax man.
Also during Gulliver’s seven years at the helm, HSBC was fined along with other global banks by US and British regulators for attempting to rig foreign exchange markets.
Last week a British court ruled that former US currency trading executive Stuart Scott should be extradited to the US to face fraud charges, days after a US jury found his alleged coconspirator guilty.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure