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HSBC Holdings PLC on Tuesday reported a decline in profit and revenue in the third quarter, but the bank continues to remain positive for the full-year.
Shares in the Asia-focused lender were down 0.1% in Hong Kong on Tuesday at HK$42.05. They closed at 473.98 pence in London on Monday.
In the three months to September 30, HSBC reported pretax profit of $3.15 billion, down 42% from $5.40 billion a year before.
"We maintained our strong momentum in the third quarter and delivered a good set of results. Our strategy produced good organic growth in all three global businesses, and net interest income increased on the back of rising interest rates. We retained a tight grip on costs, despite inflationary pressures, and remain on track to achieve our cost targets for 2022 and 2023," Chief Executive Noel Quinn said.
Net interest income improved to $8.58 billion from $6.61 billion, but net fee income fell to $2.78 billion from $3.32 billion. Net insurance premium income slipped to $2.66 billion from $2.72 billion. As a result, revenue decreased by 3.2% to $11.62 billion from $12.01 billion.
HSBC explained that its third quarter results included a $2.4 billion impairment, following the reclassification of its retail banking operations in France to held-for-sale, as well as a net charge for expected credit losses and other credit impairment charges, compared with a net release in third quarter of 2021.
However, net interest margin improved to 1.57% from 1.19% year-on-year
Its cost efficiency ratio was 68.7% in the third quarter, compared to 66.5% a year earlier.
HSBC's CET1 ratio ended September 30 CET1 at 13.4%, down from 15.9% a year ago.
Turning to the bank's business units, HSBC's Wealth & Personal Banking adjusted pretax profit rose to $2.41 billion from $1.90 billion, while Commercial Banking profit increased to $2.06 billion from $1.97 billion and Global Banking & Markets adjusted profit rose to $1.53 billion from $1.42 billion.
Regionally, HSBC's Asia operation continue to be its profit driver.
Statutory pretax profit in Asia rose to $3.51 billion from $3.30 billion a year earlier, whilst in Europe profit swung to a loss of $1.57 billion from $1.14 billion profit. Profit in the Middle East & North Africa improved to $493 million from $378 million. Profit in North America rose to $460 million from $358 million. In Latin America, profit increase to $248 million from $222 million.
In the first nine months of 2021, HSBC's group pretax profit fell to $12.32 billion from $16.24 billion, while revenue slipped to $36.85 billion from $37.56 billion.
Looking ahead, HSBC said: "Our outlook on revenue remains positive and we have upgraded our net interest income guidance for 2022 to $32 billion, based on the current market consensus for global central bank rates.
"In 2023, we now expect net interest income of at least $36 billion, with the reduction from the at least $37 billion guidance provided at our interim results reflecting the impact of sterling depreciation against the US dollar and a higher cost of funding in our trading book. We continue to monitor the expected path of interest rates. This is expected to be supported by low-single-digit percentage lending growth."
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