HSBC shares fall in London as quarterly results fall short of expectations

(Il Sole 24 Ore Radiocor) – HSBC is bringing up the rear amongst the major players on the London Stock Exchange, following the publication of quarterly results that fell short of expectations, despite being accompanied by a new share buyback. The banking giant’s shares recorded the worst performance in the FTSE 100 and the Stoxx Europe indices. Both third-quarter profit and revenue came in below forecasts. Operating revenue totalled $18.6 billion (+5 per cent), compared with the $19 billion expected by the market. As the bank points out, growth was driven by net interest income.

Analysts also highlighted the slowdown in the wealth management division, which reported stable revenues of $2.7 billion compared with last year, whilst in the first two quarters they had grown by 15 per cent and 23 per cent year-on-year. In the third quarter, the group’s net profit rose by 45 per cent year-on-year to $7.09 billion, slightly below the consensus estimate of $7.3 billion. Pre-tax profit rose by 32 per cent to $9.6 billion, ‘primarily’ due to the absence of litigation provisions recorded in the same quarter of the previous year, amounting to $1.4 billion.

The bank stated that loan losses fell by 17 per cent to $832 million, thanks to lower charges relating to the Hong Kong property sector and wealth management activities in the UK and Mexico. Pre-tax profit rose in the Hong Kong, UK and corporate and investment banking divisions, whilst profit from international wealth management and corporate banking fell. Analysts at Citi and Jefferies described the results as slightly disappointing, whilst noting that the underlying trends in assets under management within HSBC’s wealth management and private banking divisions suggest a more robust performance than indicated by reported revenues.

HSBC has decided to pay an interim dividend of $0.10 per share, the same amount as in the previous quarter, and has announced the launch of a share buyback programme worth up to $1 billion, which it plans to complete by the time the 2026 results are published. Under the leadership of its CEO, Georges Elhedery, the group has undertaken a major strategic reorganisation, cutting costs and streamlining operations. “By simplifying HSBC, we are creating greater capacity for investment, growth and the distribution of solid returns to our shareholders,” said Elhedery, commenting on the results. In recent months, the group has agreed to sell its retail banking division in Egypt to Emirates NBD, its $25 billion portfolio of mortgages and personal loans in Australia, to private equity firm Blackstone, and its life and health insurance division in Singapore to Allianz for $2.1 billion. Elhedery wants to focus the group on its core strengths: retail banking in the UK and Hong Kong, its role as a gateway to global markets for large corporations, and advisory services for high-net-worth clients.

In January, the bank finalised a bid of nearly 14 billion dollars to acquire the minority stakes held by shareholders in Hong Kong’s Hang Seng Bank. Turning to its financial results, HSBC confirmed the targets set last February. The bank stated that it remains ‘confident of achieving its targets’ and continues to forecast a net interest margin of at least $46 billion for this year. Furthermore, it continues to ‘aim for annual revenue growth from 2026 to 2028, reaching 5 per cent growth in 2028 compared with 2027’. CFO Pam Kaur referred specifically to the confirmation of these targets when asked about the fall in the share price during a conference call. “Sometimes the market expects us to revise our forecasts or targets upwards,” said Kaur. Appointed in January 2025, the CFO – as announced in September – will leave HSBC in 2027.