HSBC reports $8.5 billion pre-tax profit in third quarter

HSBC said third quarter pre-tax profits rose 10 percent year in 2024 – Copyright AFP/File ANTHONY WALLACE

Banking giant HSBC said Tuesday that pre-tax profit in the third quarter rose 10 percent year-on-year, citing revenue growth in two of its divisions, days after the lender announced an organisational overhaul.

The rise in pre-tax profit to $8.5 billion reflected a strong performance in its wealth management division as well as higher revenues in global banking and markets, HSBC said in an earnings release.

The London-headquartered bank last week announced a major shakeup under new chief executive Georges Elhedery, who assumed his role in September.

“We delivered another good quarter, which shows that our strategy is working,” Elhedery said in a statement Tuesday. 

HSBC on Tuesday also upped total distribution this year to $18.4 billion, and announced a fresh round of share buybacks of “up to $3 billion” — the latest in a series of moves to distribute capital to its investors.

Third-quarter revenue increased by five percent on-year to $17 billion, while operating expenses during the same period rose two percent on-year to $8.1 billion.

The sale of HSBC’s Argentina business, first revealed in April, is expected to be completed in the fourth quarter of this year, the bank added.

– Structural overhaul –

Last week, HSBC said it would simplify its structure and split into four distinct parts starting next year: Hong Kong, UK, “corporate and institutional banking” plus “international wealth and premier banking”.

The bank will also streamline its geographical set-up by bringing together its Asia-Pacific and Middle East regions, while uniting the European and US operations under one roof.

Chief risk officer Pam Kaur will take over as chief financial officer from January 1 — the first woman in the role in the bank’s 160-year history.

The changes are “aimed at increasing focus on leadership and market share in the areas where we have clear competitive advantages, creating a simpler organisation with clarity of accountability and faster decision-making, and reducing the duplication of processes”, HSBC said on Tuesday.

Elhedery said in an internal memo that “there will inevitably be a reduction in duplicated roles, particularly at senior levels” due to the restructuring, according to Bloomberg News. 

More details about the reorganisation will be announced in February along with its full-year results, HSBC said.

HSBC generates most of its revenue in Asia and has spent several years pivoting to the region, vowing to develop its wealth business and target fast-growing markets.

The bank said it will continue to monitor the impact of China’s package of stimulus measures announced last month.

“These measures resulted in elevated volatility at the end of (the third quarter), which resulted in an increase in client activity, notably in Wealth, Equities, and Global Foreign Exchange in Hong Kong,” it said.

The lender this month became a direct participant in China’s cross-border interbank payment system, or CIPS.

HSBC shares in Hong Kong have risen by around 11 percent since the start of the year.

The bank, which straddles East and West as Europe’s biggest lender, has come under pressure as US-China tensions rachet up.

Major shareholder Ping An last year called on HSBC to spin off its Asia assets but the proposal was voted down.