Singapore Oct 25 (BUS): HSBC Holdings reported a surprise 74% rise in third-quarter profit as concerns about pandemic-related bad loans eased, allowing it to announce a $2 billion share buyback.
But HSBC said the cost forecast for 2022 had increased to $32 billion from $31 billion, due to inflationary pressures.
“While we maintain a cautious view of the external risk environment, we believe the lows of recent quarters are behind us,” CEO Neil Quinn said in Monday’s results statement.
Cowen, whose role was confirmed in 2020 as the economic crisis triggered by the pandemic began, is betting on Asia to drive growth, by moving global CEOs there and pumping billions into the lucrative wealth business.
The bank reported pre-tax earnings of $5.4 billion for the quarter ending in September, versus $3.1 billion a year earlier and an average estimate of $3.78 billion from 14 analysts compiled by HSBC.
HSBC released $700 million in cash it had set aside in case bad loans linked to the pandemic surge, unlike the same time a year ago when it took out $800 million in anticipation of such strained debt.
In fact, the bank said, economic conditions have improved, while the performance of loans has been better than expected.
The results from the London-based bank come as rivals such as Citigroup ride a boom in mergers and acquisitions, while avoiding weakness in the lending business.
However, HSBC’s investment banking business saw lower income compared to the same period last year, with the global debt business in particular declining.
It is the second largest British bank to report strong results for the quarter, after Barclays on Thursday doubled its profits on the back of the strong performance of the investment bank’s advisory business.
London-listed shares of HSBC are up 15% so far this year against a 5% rise in Asia-focused rival Standard Chartered, while Barclays is up 35% and US-listed Citi is up 16%.
HF