Better investment product sales and higher interest income saw HSBC's Hong Kong operation become the global bank's best-performing region in the third quarter of the year and help offset weak performance in overseas markets.
HSBC, the largest lender in the city and Europe, reported yesterday that it made a pre-tax profit of US$2.07 billion in Hong Kong in the quarter, up 1 per cent on the second quarter. The group reported a 19.6 per cent quarter-on-quarter drop in global pre-tax profit to US$4.5 billion.
The Hong Kong business reported year-on-year growth of 15.75 per cent, compared with growth of 30 per cent globally.
Hong Kong was the largest pre-tax profit contributor to the group in the quarter, representing 46 per cent of the total, followed by the rest of Asia-Pacific with 34 per cent, and then the United States, the Middle East and Latin America. In Europe, it reported a pre-tax loss of US$45 million.
"Our home markets of [Britain] and Hong Kong contributed more than half of the group's underlying profit before tax," group chief executive Stuart Gulliver said. "Hong Kong performed well in the quarter, reflecting broad-based revenue growth. [It] continues to benefit from its close economic relationship with mainland China. We remain well positioned to capitalise on improving economic conditions in these markets."
Hong Kong contributed most to the group by offering higher net interest income, which Gulliver said was due to improved mortgage spreads and higher average mortgage balances. That offset declines in retail banking and wealth management revenues in other parts of the world and a fall in insurance revenue globally.
The better investment sentiment in the city also helped HSBC's Hong Kong office report a rise in fee income from sales of unit trusts and other products and higher income from retail stock brokerage commissions.
Gulliver reiterated that he expected the mainland to have a soft landing, with growth stabilising as a result of financial and economic reforms.
Investec said in a report that Hong Kong was "a standout performer with 2 per cent quarter-on-quarter growth in revenues" while its "currency customer loans are marginally up quarter on quarter, too".
Louis Tse Ming-kwong, a director of VC Brokerage, said HSBC would continue to rely on Hong Kong and the mainland to drive growth.
"The US and European markets have not yet fully recovered," Tse said. "In contrast, mainland China still has a [gross domestic product] growth rate higher than 7.5 per cent while it is actively promoting the internationalisation of the yuan business. The local stock and fund markets are still very active. HSBC, as the largest lender in Hong Kong, will benefit from these growth trends in Hong Kong and China."