HSBC’s CEO Paints Bullish Outlook After Profit Beats Estimates
(Bloomberg) -- HSBC Holdings Plc painted a bullish outlook in the months ahead fueled by likely increases in interest rates and revealed it would soon kickoff a $2 billion share buyback.
Adjusted pretax profit rose to about $6 billion in the third quarter, beating estimates, the London-based lender said on Monday. HSBC reversed $700 million in expected credit losses and anticipates more will be taken back through the end of the year, offsetting a decline in revenue wealth management and markets.
“While we retain a cautious outlook on the external risk environment, we believe that the lows of recent quarters are behind us,” Chief Executive Officer Noel Quinn said in the statement.
Globally, banks have been benefiting from an economic recovery as pandemic restrictions have eased and stimulus has fueled a surge in dealmaking and trading, but HSBC said revenue at its debt markets business was partly lower due to a shift of capital out of that businesses. The lender also saw lower revenue in wealth and personal banking, while commercial banking income gained.
The bank’s shares gained about 1% to HK$47 as Hong Kong trading resumed for the afternoon session.
HSBC, an institution that’s heavily connected to world trade, is in the midst of a big shakeup to expand in Asia and is targeting wealth management as a key profit driver. The lender is exiting businesses in the U.S. and Europe, pouring billions of dollars in fresh investments into Asia, where the bank already makes most of its money. Adjusted profit in Asia accounted for more than half of the total in the third quarter.
The lender downplayed risks spreading in China’s real estate sector as turmoil swirls around China Evergrande Group. It had $19.6 billion exposure in China’s real estate sector, including Hong Kong incorporated property firms, at the end of June, the lender said. As of the end of September, HSBC has no direct credit exposure to developers in the “red” category under China’s three red lines.
In an interview with Bloomberg Television, Chief Financial Officer Ewen Stevenson said the bank expects no material fallout from Evergrande.
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