HSBC’s third-quarter pre-tax profit misses estimates on hedging charges, bad loans to China’s property sector

Net profit rose 180 per cent to US$5.6 billion in the September quarter, compared with US$2 billion a year earlier

HSBC reported credit impairments of US$1.1 billion in the third quarter, including US$500 million related to its mainland China real estate portfolio

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Pedestrians walk past an HSBC branch in Central, Hong Kong. Photo: Jelly Tse

Published: 12:28pm, 30 Oct 2023Updated: 10:06am, 30 Jan 2024

HSBC, the biggest of Hong Kong’s three currency-issuing banks, missed third-quarter profit estimates by a wide margin because of higher bad-debt provisions related to mainland China’s real estate sector and charges associated with its hedging strategy.

Net profit rose 180 per cent to US$5.6 billion in the three months to September, or US$0.29 per share, from US$2 billion in the period last year, missing the US$6.16 billion net profit expected by analysts, according to a consensus estimate compiled by Bloomberg.

Pre-tax profit jumped 147 per cent to US$7.71 billion in the quarter, compared with US$3.15 billion a year earlier. This was worse than market estimates of US$8.26 billion.

HSBC also announced a new US$3 billion share buy-back programme that will commence soon and a third-quarter dividend of US$0.1 per share, taking three quarterly dividends to a total of US$0.30 per share.

HSBC CEO Noel Quinn addresses shareholders during the bank’s annual general meeting in Birmingham, England, on May 5, 2023. Photo: Chad Bray

“We have had three consecutive quarters of strong financial performance and are on track to achieve our mid-teens return on tangible equity target for 2023,” said CEO Noel Quinn said in an earnings statement to the Hong Kong stock exchange on Monday.