HSBC Holdings posted a robust 10% increase in third-quarter profit, outpacing analyst predictions. This growth comes as HSBC benefits from strong wealth and wholesale banking performance amid slower-than-expected interest rate cuts. The bank’s pre-tax profit for the quarter, spanning July to September, reached $8.5 billion, surpassing the $7.6 billion analyst estimate average.

In addition to its impressive earnings, HSBC has announced an additional $3 billion share buyback, adding to an earlier $6 billion program initiated this year. Following these announcements, HSBC’s Hong Kong shares saw a 2% increase.

Major Restructuring and New Leadership Strategy

Under the guidance of newly appointed CEO Georges Elhedery, HSBC is embarking on a substantial restructuring to enhance efficiency and reduce costs. The restructuring plan includes merging certain operations and organizing the bank’s global footprint into distinct "East" and "West" regions. The full details of this new operational structure are expected in February next year.

Focus on Cost Control and Efficiency in a Shifting Interest Rate Landscape

In light of evolving interest rate conditions, HSBC continues to target mid-teen returns on tangible equity for 2024 and 2025. However, CEO Elhedery acknowledged the changing interest rate outlook and potential volatility in the coming period.

HSBC’s revenue rose by 5% year-on-year in Q3, reaching $17 billion, with high customer activity in wealth products buoying growth. Foreign exchange, equities, and global debt markets emerged as strong performers for the bank.

Comparison with Competitors

HSBC’s strategic moves reflect broader industry trends as U.S. and European banks, like Barclays, also aim to maintain profitability amidst rate changes. Barclays, for instance, recently exceeded earnings expectations, showing promising resilience as global central banks adjust their interest rates.

HSBC Dividend Announcement

HSBC confirmed a third interim dividend of 10 cents per share, adding to the previously announced 41 cents per share for 2024.

Source: (Investing.com/Reuters)