HSBC Commences $3Bn Buyback, Q3 Profit Disappoints on Rising Costs

HSBC on Monday reported a fresh $3 billion share buyback and a more than doubling of third-quarter profit that nonetheless missed forecasts as spending on technology and operations grew and inflation pushed wage expectations higher.

HSBC indicated costs are likely to increase by up to 5% this year excluding an acquisition, more than its previous goal of a 3% rise, as technology and operating spending grows and it considers a boost to staff bonuses in the fourth quarter.

The bank posted a pre-tax profit of $7.7 billion for the July to September quarter, versus $3.2 billion a year earlier, but the result trailed the $8.1 billion mean average estimate of brokers compiled by HSBC.

The London-headquartered bank with a market value of $118.6 billion said it aimed to complete the share buyback by next February, lifting the total buybacks announced this year to $7 billion.

It also dished out the third interim dividend payout this year of 10 cents per share, bringing the total payout this year to 30 cents per share.

The bank's Hong Kong-listed shares were down 0.26% after the earnings release, narrowing losses from 2.1% in the morning and outperforming the market's wider financial index, (.HSNF) which fell 1.21%.

HSBC's third-quarter revenues rose 2% in the Global Banking and Markets division that houses its investment bank, a more robust performance than rival Barclays' BARC.L 6% drop as HSBC's large payments business benefited from higher interest rates.

New flows into its wealth business gained traction, with $34 billion of net new invested assets in the quarter and its wealth balance sheet growing by 12% compared with last year.

The lender's net interest margin of 1.70% was squeezed by 2 basis points compared with the prior quarter, reflecting an increase in customers migrating their deposits to term products, particularly in Asia.

(Source: Reuters)