HSBC Holdings PLC yesterday said pretax profit slipped more than 40 percent in the third quarter, citing an impairment on the planned disposal of its retail banking operations in France.
However, results were better than analyst estimates and were boosted by rising interest rates making lending more profitable.
The Asia-focused giant said pretax profit fell by US$2.3 billion to US$3.1 billion year-on-year, while net profit dropped 46 percent to US$1.91 billion.
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In a statement to the Hong Kong stock exchange, HSBC said it was looking to offload its French retail arm “as part of our actions to simplify our operations” in Europe, adding that it hoped the sale would go through in the second half of next year.
While reclassifying the French division, the bank “recognized an impairment of US$2.4 billion,” which affected the third-quarter figures, but adjusted pretax profit rose 18 percent to US$6.5 billion, beating analysts’ estimates.
The bank’s net interest income, which measures what it makes from lending minus interest paid on deposits and is a key measure of profitability, came in at US$8.6 billion, its best third quarter in more than eight years.
“Macroeconomic headwinds, including higher inflation and a weaker outlook, continue to weigh on the global economy,” HSBC said, adding that it had set aside more provisions against bad loans and had expected credit losses of US$1.1 billion for July to last month.
The bank specifically cited global uncertainty sparked by Russia’s invasion of Ukraine, the fall of the pound in Britain and the grim condition of China’s real-estate sector.
However, HSBC chief executive Noel Quinn said the bank was focused on delivering a returns target of at least 12 percent for next year, as well as keeping costs down.
“We retained a tight grip on costs, despite inflationary pressures, and remain on track to achieve our cost targets for 2022 and 2023,” he said in the earnings report.
HSBC is headquartered in London, but makes the vast majority of its profits in Asia, especially in China and Hong Kong.
Senior executives from the bank are expected to be in Hong Kong next week for a bankers’ summit that is being hosted by the territory, which only last month lifted mandatory quarantine for all international arrivals.
HSBC has vowed to accelerate a multi-year pivot to Asia and the Middle East, with ambitions to lead Asia’s wealth management market.
The bank said it would invest US$6 billion in Hong Kong, China and Singapore and hire more than 5,000 wealth advisers, while slashing 35,000 jobs and cutting less profitable operations in other markets, including France and the US.
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