HONG KONG: HSBC shares rallied Monday in a positive response to quarterly profit results after the British banking giant underwent a radical cost-cutting exercise.
In the three months to September its adjusted pretax profit — which strips out one-off items and unfavourable currency movements — rose seven percent from a year ago to $5.59 billion, beating analysts’ expectations.
Reported pretax profit, however, plunged 86 percent from a year ago to $843 million. That figure included the impact of the sale of the bank’s Brazil business, which set thelender back $1.7 billion.
“Reported profits were down, but adjusted profits were higher than last year’s third quarter in all four global businesses and four out of five regions,” HSBC global chief executive Stuart Gulliver said.
HSBC last year announced a radical overhaul to cut annual costs by $5 billion in two years by shedding 50,000 jobs worldwide, exiting unprofitable businesses and focusing more on Asia.
Gulliver said the bank had achieved $2.8 billion in annualised savings so far and was on track to reach its end-2017 target.
The bank’s balance sheet showed it continued to downsize in the US, selling $900 million worth of consumer and mortgage lending assets.
Like most global lenders, HSBC has been struggling to boost profits as China’s economy slows and uncertainty caused by Britain’s looming exit from the European Union casts a shadow over the sector.
On top of that, it has been grappling with more stringent capital rules, low interest rates as well as scandals stemming from its own misbehaviour.
In the latest incident, a French prosecutor has called for the bank to stand trial for allegedly enabling French clients to hide more than 180 billion euros from the taxman, a source close to the probe said Thursday.
If the case goes to trial, HSBC would face charges that its private banking division offered its customers several ways of hiding assets from the French taxman, notably via the use of offshore tax havens.
The September quarter adjusted profit topped the $5.29 billion average estimate of five analysts surveyed by Bloomberg News.
Investors responded positively to the results with HSBC shares up 2.18 percent at HK$58.70 ($7.57) in afternoon trade in Hong Kong.—APP
