HSBC Holdings plc (NYSE:HSBC) announced its 3Q 2017 Earnings Release. The highlights include:
Financial performance
- Reported profit before tax for 9M17 of $14.9bn was $4.3bn or 41% higher than for 9M16, in part reflecting favourable movements in significant items, which included a loss on sale and trading results of the operations in Brazil that we sold on 1 July 2016; adjusted profit before tax of $17.4bn was $1.2bn or 8% higher than in 9M16, reflecting revenue growth, notably in RBWM and GB&M, and lower LICs, which were partly offset by an increase in operating expenses.
- Reported revenue for 9M17 of $39.1bn was $0.2bn higher, as growth was partly offset by an adverse impact of foreign currency translation; adjusted revenue of $39.1bn increased by $1.1bn or 3%, reflecting higher revenue in RBWM and CMB due to higher average deposit balances and wider spreads in Asia, and higher revenue in GB&M across all of our businesses, which were partly offset by lower revenue in Corporate Centre and GPB.
- Reported operating expenses for 9M17 of $25.0bn were $2.4bn or 9% lower due to a decrease in significant items; adjusted operating expenses of $22.4bn were $0.9bn or 4% higher, reflecting an increase in performance-related pay and investments in business growth programmes. The impact of our cost-saving initiatives broadly offset inflation and continuing investment in regulatory and compliance programmes.
- Adjusted jaws for 9M17 was negative 1.3%.
- Reported profit before tax for 3Q17 of $4.6bn was up $3.8bn compared with 3Q16, reflecting the net favourable effects of significant items; adjusted profit before tax of $5.4bn fell by $0.1bn. Compared with 2Q17, reported and adjusted profit before tax both fell by $0.7bn. Lower reported profit before tax reflected higher operating expenses, while the reduction in adjusted profit before tax reflected lower revenue in Corporate Centre and GB&M, as well as an increase in operating expenses.
- Capital base remained strong, with a common equity tier 1 (‘CET1’) ratio of 14.6% and a leverage ratio of 5.7%.
Strategic execution
- Completed 71% of the buy-back announced in July 2017, at 26 October
- Further $13bn of RWA reductions in 3Q17, bringing the total reduction since the start of 2015 to $309bn
- Achieved annualised run-rate savings of $5.2bn since our investor update, and remain committed to delivering positive adjusted jaws for 2017
- Continue to make good progress with actions to deploy capital and invest:
– Delivered growth from our international network with a 7% increase in transaction banking product revenue and a 14% rise in revenue synergies between global businesses compared with 9M16
– Pivot to Asia generating returns and driving over 70% of Group adjusted profit in 9M17; 17% lending growth vs. 3Q16
– Lending growth in Guangdong of $1.1bn vs. 3Q16
– Maintained momentum in Asian Insurance and Asset Management, with annualised new business premiums and AuM up 13% and 17%, respectively, compared with 9M16
Stuart Gulliver, Group Chief Executive, said:
We maintained good momentum in the third quarter, with higher revenue in our three main global businesses. We also continued to make good progress with the strategic actions we set out in 2015. Our international network continued to deliver strong growth in the third quarter, and our pivot to Asia is driving higher returns and lending growth, particularly in Hong Kong.