HSBC delivered higher than expected profits on the back of rising interest rates in the third quarter and announced changes to its leadership with the appointment of a new chief financial officer.
The bank on Tuesday reported adjusted pre-tax profit of $6.5bn for the third quarter compared to $5.5bn a year earlier, surpassing analyst estimates of $6bn as a global rise in interest rates helped spur higher returns across the UK-based lender’s global businesses.
HSBC announced that Georges Elhedery, co-head of global banking and markets, would replace Ewen Stevenson as chief financial officer. Stevenson will step down at the end of this year. Greg Guyett, formerly Elhedery’s co-chief, has been made chief executive of global banking and markets with immediate effect.
“We maintained our strong momentum in the third quarter and delivered a good set of results,” said chief executive Noel Quinn. “We are focused on executing our plans and delivering our returns target of at least 12 per cent from 2023 onwards and, as a result, higher distributions to our shareholders.”
However, the bank maintained its guidance for a dividend payout ratio of 50 per cent in 2023 and 2024.
Pre-tax reported profit for the third quarter was $3.1bn, down from $5.4bn a year ago, although it came in well above analyst expectations of $2.5bn.
After adjusting for impairments from the bank’s sale of its French retail business and foreign exchange impacts, revenues rose 28 per cent from a year ago to $14.3bn, with revenues rising across all businesses thanks to interest rate increases.
The solid quarterly results come despite recent turmoil in the UK’s foreign exchange and government bond markets, and will serve to bolster HSBC’s defence against calls to split its Asian and western operations.
The bank has faced pressure this year from its largest shareholder Ping An, which holds a more than 8 per cent stake in the company and argues spinning off the bank’s Asia business would create up to $35bn of additional market value.
While it has repeatedly rebuffed Ping An’s demands, the bank is working to reshape its global network to focus on Asia and other high-growth regions.
HSBC is in the process of exiting Greece and this month said it was in the early stages of a strategic review of its profitable Canadian business that could lead to a $9bn sale. The bank is also seeking to reduce expenses and noted in an internal memo this month that it was reviewing its London headquarters in Canary Wharf, where its lease will end in 2027.
However, HSBC said in the memo that it would maintain its operations base in London, despite persistent questions about whether the lender would be better served by having its headquarters in Hong Kong, where it generates the bulk of its profits.
Asia accounted for more than 55 per cent of HSBC’s $6.6bn in adjusted pre-tax profits in the third quarter.