HSBC’s pre-tax profits rose by 32 per cent in the third quarter, as a result of a decline in costs related to fines and legal settlements.
HSBC beat expectations for third-quarter performance, reporting a pre-tax profit for the three months to the end of September of $6.1bn (£3.9bn), up from $4.6bn (£2.97bn) during the same period a year ago.
The figures came in spite of a 4 per cent decline in revenues, of which the biggest contributor was lower wealth management sales in Hong Kong, due to the China stock market correction, as well as a slip in overdraft fees in the UK.
One-off contributors to the better than expected profits included a $1.4bn (£0.9bn) drop in fines, settlements and UK customer redress, compared with the third quarter last year, along with gains from changes in the fair value of the bank’s own debt.
Graham Spooner, investment research analyst at The Share Centre, said the figures were better than expected by the market. “Interested investors should also be aware that the group stated today that it may put off its decision on its controversial domicile until next year.
“HSBC, which generates two-thirds of its earnings from Asia, announced a three year plan in June and this update provided investors a first chance to analyse the progress.
“The company said that so far, adjusted operating expenses had fallen by 4 per cent from the second quarter and it is nearly 30 per cent of the way towards completing the reduction in its assets.
“However, HSBC has remained a significant payer and though progress may continue to be slow in the face of many challenges, the shares could be a better option than other banks,” he added.
Back in July, FTAdviser sister publication Financial Adviser revealed HSBC was the bank to receive the second highest number of visits from the regulator in 2014.
FCA officials visited Barclays more than twice as often as any other bank in 2014 - some 186 times last year - with HSBC the second highest on 85 visits.
Last week saw several of the UK’s largest banks report increasing expenses relating to conduct issues or payouts for Payment Protection Insurance.
emma.hughes@ft.com
