HSBC’s gradual shift towards Asia showed signs of paying off on Monday, as the global bank posted an almost five-fold increase in profits for the most recent quarter, broadly meeting analyst expectations.
The bank said that pre-tax profit in the three months to the end of September had reached $4.6bn, or around £3.5bn, up from just $843m in the same period in 2016.
Reported revenue for the quarter came in at $12.98bn, representing a small slowdown from the second quarter of 2017, but a more than 35 per cent rise over the same quarter in 2016.
Revenue increased across its retail banking and wealth management operations, across its commercial banking business and across its global banking and markets division.
“We maintained good momentum in the third quarter, with higher revenue in our three main global businesses,” said chief executive Stuart Gulliver. “Our international network continued to deliver strong growth […], and our pivot to Asia is driving higher returns and lending growth, particularly in Hong Kong,” he added.
The performance comes at a critical time for HSBC’s leadership. Earlier in October, the bank chose John Flint as its next CEO, to take over in February. Like Mr Flint, newly arrived chairman Mark Tucker also spent much of his career with the bank in Asia, leading many analysts to suggest that HSBC’s move east will only accelerate over the coming year.
In the most recent quarter, the lender reported that pre-tax profit increased by 10 per cent in Asia to $4bn. In Europe, its loss narrowed to $50m from $1.6bn in 2016.
Its common equity tier 1 ratio - a widely referenced measure of financial strength - was 14.6 per cent at the end of September, which was marginally below its level at the end of June but still in-line with analyst expectations.
Kathleen Brooks, research director at City Index, described the results as “stellar” but also noted that the earnings looked particularly strong considering the especially weak performance in the same quarter a year ago.
Commenting on why shares in the bank had not risen on the latest earning report, she pointed to HSBC’s 20 per cent share price increase so far this year already, which suggests many investors may be keen to take profit.
