HSBC profits rise by $4.5bn after interest rate boost



Banking giant HSBC has revealed a $4.5bn (£3.7bn) rise in its profits in the latest three-month period, thanks to a boost from higher interest rates.

The company said pre-tax profits hit $7.7bn in the third quarter of the year, compared to $3.2bn the same period a year earlier. It unveiled plans for a $3bn share buyback.

HSBC posted a net interest margin of 1.7pc, up by 19 basis points compared with last year. The net interest margin is the difference between average lending and deposit rates.

Chief executive Noel Quinn said: “We have had three consecutive quarters of strong financial performance.”

However, analysts had been expecting a bigger uplift in the period, with forecasts for HSBC to deliver $8.1bn in pre-tax profits. The net interest margin for the third quarter, while up from last year, was down slighly from the second quarter of the year.

Jefferies analyst Joe Dickerson said costs were “likely to be the controversy”, after HSBC increased its spending on technology and upped performance related payouts.

HSBC on Monday signalled it could increase bonuses before the end of the year. Mr Quinn told Bloomberg TV: “We have signaled, potentially in the fourth quarter because of the very strong trading performance of the business, we may well top up our variable pay by an extra 1pc, or $300m.”

It comes ahead of the UK scrapping its cap on bankers’ bonuses. The Bank of England confirmed last week that bonuses would no longer be capped at two times annual salaries from the end of October, as part of a drive to increase competitiveness and help attract talent.

Read the latest updates below.

07:55 AM GMT

Oil prices slip as fears of wider Middle Eastern conflict recede

Oil prices tumbled on Monday after fears that the conflict in Israel could spread into other countries receded.

Brent crude at one point dipped below $89 a barrel, having gained more than 3pc on Friday on signs that other nations could be drawn into the conflict.

There have been a spate of attacks in the Middle East, with the US last week hitting two sites in eastern Syria which the Pentagon said were being used by Iran’s Islamic Revolutionary Guard Corps.

Eric Robertsen, global head of research and chief strategist at Standard Chartered, said: “As the conflict in the Middle East continues, we are on watch for a collision course between tight financial conditions and geopolitically driven risk aversion.”

Brent crude

Brent crude

07:35 AM GMT

Frasers sells Missguided brand to Shein

Frasers Group has sold the Missguided intellectual property and trademarks to Chinese fashion giant Shein, following weeks of speculation over a deal.

The House of Fraser owner confirmed the sale of the IP, although said it would be keeping Missguided’s real estate and employees which had already been integrated into Frasers’ fashion division.

It comes after reports earlier this month that Shein and Frasers were in talks over the business.

Michael Murray, CEO of Frasers Group, said:

“With I Saw it First and Missy Empire, we now have a foothold in women’s digital-first fashion. 

“Retaining the combined Frasers fashion teams whilst rationalising our portfolio in this space to focus on fewer brands makes a lot of sense in the current climate. 

“We are also excited about the ongoing discussions around further collaboration between Frasers Group and Shein.”

07:26 AM GMT

Don’t expect massive reversal in Chinese property market, says HSBC chief

HSBC chief executive Noel Quinn has been speaking on Bloomberg TV this morning, and addressed concerns over its exposure to China’s property market.

“The commercial real estate market in China has had a huge policy correction and I think we are at the bottom of the market. 

“But it will take quite a while for that market to recover and regain momentum. So I am not expecting a massive reversal in that sector in the next 12 months or so, but I do expect it to be a gradual improvement from where we are.”

HSBC Noel Quinn

HSBC chief executive Noel Quinn – Reuters

07:18 AM GMT

Good morning

HSBC has released a trading update this morning showing its pre-tax profits ballooned to $7.7bn for the three months to the end of September, compared to $3.2bn for the same period a year earlier.

Analysts were, however, disappointed, having expected even larger returns amid surging interest rates worldwide.

5 things to start your day

1) Sunak boosts AI spending pledge to £400m | Investment comes as PM set to host world leaders at Bletchley Park

2) Bailey to pile pressure on Hunt as gloom paralyses rate setters | Chancellor squeezed by restricted fiscal headroom and high rates

3) Landlords pay off hundreds of millions in mortgage debt to slash interest bills | Higher rates also fuelling rental market exodus

4) Electric cars to prompt more traffic jams | Cheaper running costs predicted to result in more cars on road

5) Credit crunch concerns hit highest since 2008 | Difficulty in getting loans comes after rapid rate rises

What happened overnight

Asian shares were mostly lower on Monday ahead of a Federal Reserve decision this week on interest rates.

Tokyo’s Nikkei 225 index lost 1.3pc to 30,591.03. There is speculation, given recent signs of sustained inflation, that the Bank of Japan may make adjustments to its monetary policy in a meeting that ends on Tuesday.

Over the weekend, more than 30 companies listed in China revealed intentions to conduct share buybacks and purchases after China announced a slew of measures aimed at stabilizing falling stock prices. The Hang Seng in Hong Kong fell 0.3pc to 17,349.36 and the Shanghai Composite index rose 0.2pc at 3,022.90.

Nominal retail sales in Australia rose 0.9pc in September from August, data from the Australian Bureau of Statistics showed on Monday. This is the fastest pace in eight months, suggesting some resilience in consumer spending. Australia’s S&P/ASX 200 slipped 0.6pc to 6,787.90.

South Korea’s Kospi added 0.4pc to 2,311.55. Taiwan’s Taiex edged up 0.1pc and the SET in Bangkok also was up 0.1pc.


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